UK jobs market weakens as unemployment rate rises

The UK jobs market has weakened as wage growth slows and the unemployment rate rises, official statistics show.

The annual rate of pay growth in the three months between March and May slowed to 5%, the Office for National Statistics (ONS) said.

Meanwhile, the unemployment rate rose to 4.7%, its highest in four years, though the ONS has said the figure needs to be treated with caution due to problems with how the data is collected.

Economists say a weaker labour market makes it more likely the Bank of England will cut interest rates in an attempt to boost the economy at its meeting next month.

It added that survey data suggested that some firms may not be recruiting new workers or replacing ones who have left.

The number of job vacancies is now at its lowest in 10 years, excluding the plunge seen during the pandemic when lockdowns stopped firms from hiring.

Yael Selfin, chief economist at KPMG UK, said the "slowing pay growth opens the door for an interest rate cut in August".

"The impact of April's tax and administrative changes has led to a marked slowdown in hiring activity among firms," she added.

"With domestic activity remaining sluggish, the MPC will likely want to provide support via looser policy to prevent a more significant deterioration in the labour market."