The UK jobs market bucked predictions of a further weakening in June after official figures showed unemployment fell but wages growth slowed to its lowest for two years.
Unemployment unexpectedly dropped to 4.2% from 4.4% in the three months to June from the previous three months, according to the Office for National Statistics (ONS).
However, wage growth, excluding bonuses, was 5.4% year on year over the three months to June, slipping from 5.7% in the previous three months and represented the smallest increase since the period to July 2022, when it was 5.2%.
Adjusted for inflation, wages rose by 1.6%, meaning many workers will experience a continued improvement in their standard of living.
The chancellor, Rachel Reeves, said: “Today’s figures show there is more to do in supporting people into employment because if you can work, you should work.
“This will be part of my budget later in the year where I will be making difficult decisions on spending, welfare and tax to fix the foundations of our economy so we can rebuild Britain and make every part of our country better off.”
Reeves will deliver her first budget on 30 October.
Wages growth in the finance and business services industry outpaced other sectors with an annual improvement of 6.2%.
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The ONS said: “The construction sector saw the smallest annual regular pay growth across sectors, at 3.5%. In April to June 2024, the manufacturing sector saw the largest annual total pay growth at 6.7%.”
