UK labour market data are starting to point to stabilisation after months of attrition. Private sector payrolls rose by 8,000 in September, the first increase since January, while hospitality also posted a small rise after being hit by last year’s minimum wage increase and tax rises; retail continued to shed jobs. The series is subject to revision and remains clouded by sampling issues, yet the direction aligns with hiring surveys and with the unemployment rate edging down to 4.7% from 4.9%, although part of that fall reflects higher inactivity.
Labour Market Recovery Signals
UK labour market data are starting to point to stabilisation after months of attrition. Private sector payrolls rose by 8,000 in September, the first increase since January, while hospitality also posted a small rise after being hit by last year’s minimum wage increase and tax rises; retail continued to shed jobs. The series is subject to revision and remains clouded by sampling issues, yet the direction aligns with hiring surveys and with the unemployment rate edging down to 4.7% from 4.9%, although part of that fall reflects higher inactivity.
Wage Growth and Rate Outlook
Stabilisation, however, does not imply renewed heat, and the wage picture remains contained. Private sector pay growth adjusted for compositional effects was 3.4%, a pace the Bank of England links to a 2% inflation target over the medium term, while the latest one-month annualised rise in private sector regular pay growth was 1.7%. BoE wage surveys have been broadly steady around 3.5% throughout the year, and there is limited evidence so far of energy-driven second-round effects; against that backdrop, any rate rise in November and a potential further move in February would be framed as insurance, with the scope for cuts from late 2027 if such effects do not materialise.
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