CBI/Pertemps Labour Market Update: July 2024

The Labour market continues to cool.

This month's labour market figures continue to show signs of gradual cooling, with the number of vacancies still falling and unemployment rising. The UK employment rate (for people aged 16 to 64 years) was estimated at 74.4% in March to May 2024, below estimates of a year ago, and decreased in the latest quarter. The UK unemployment rate (for people aged 16 years and over) was estimated at 4.4% in March to May 2024, above estimates of a year ago, and increased in the latest quarter. The UK economic inactivity rate for people aged 16 to 64 years was estimated at 22.1% in March to May 2024, above estimates of a year ago, but decreased in the latest quarter.

In April to June 2024, the estimated number of vacancies in the UK decreased by 30,000 on the quarter to 889,000. Vacancies decreased on the quarter for the 24th consecutive period but are still above pre-coronavirus (COVID-19) pandemic levels.

Estimates for payrolled employees in the UK increased by 54,000 (0.2%) between April and May 2024, and rose by 265,000 (0.9%) between May 2023 and May 2024. Annual growth in employees' average regular earnings (excluding bonuses) in Great Britain was 5.7% in March to May 2024, and annual growth in total earnings (including bonuses) was 5.7%. Annual growth in real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers' housing costs (CPIH)) for regular pay was 2.5% in March to May 2024, and for total pay was 2.2%.

While pay growth remaining strong owing to the difficulties employers face when hiring provides some short-term relief to consumers, there are tentative signs of pay growth easing as the labour market continues to cool and expectations for inflation are falling.

Pay growth remaining relatively strong is a reminder that the Employment Rights Bill comes at a time when businesses already face significant employment cost pressures that are weighing on investment and pushing up prices. Businesses have a strong incentive to invest in productivity but the cost pressures they face are squeezing their budgets to do so. The government will need to carefully monitor the extent to which this makes delivering economic growth harder.

Download the full labour market update, in partnership with Pertemps, below.