UK wage growth eases, vacancies fall

UK wages grew at their slowest pace in nearly two years in the three months to May, according to figures released on Thursday by the Office for National Statistics.

Annual pay excluding bonuses was up 5.7%, down from 6% growth in the previous three-month period. This was in line with economists’ expectations and marked the slowest pace of growth since September 2022.

Including bonuses, total earnings rose 5.7%, down from 5.9% and also as expected.

Meanwhile, the unemployment rate was steady at 4.4% in May, in line with expectations.

The data also showed that job vacancies fell from 905,000 in the three months to May to 889,000 in the three months to June, leaving them 32% below the peak in May 2022.

Liz McKeown, ONS director of economic statistics, said: "Earnings growth in cash terms, while remaining relatively strong, is showing signs of slowing again,

"However, with inflation falling, in real terms it is at its highest rate in over two and a half years."

Ashley Webb, UK economist at Capital Economics, said: "While the easing in wage growth in May was broadly in line with what the consensus and the Bank of England expected, it probably doesn’t offset the overshoot in services inflation in recent months.

"As a result, we have changed our forecast for the timing of the first interest rate cut from 5.25% from August to September, although it is a close call."