UK Private Sector Pay Growth Slows Amid Cooling Job Openings

The UK's private sector pay growth has cooled down over the past three months to June. According to data from the Office for National Statistics, this cooling down is accompanied by a decline in job openings to their lowest level in more than five years. The unemployment rate remained steady at 4.9%, while employment rose by 83,000 in the second quarter.

The Bank of England's focus is on regular earnings in the private sector, as it provides a clearer picture of wage pressure that can feed into services prices. Regular earnings rose 2.8% year-on-year, which is the weakest since late 2020 and aligns with the central bank's latest forecast, supporting a 'wait and see' stance.

The overall headline pay number is higher due to public sector pay awards, which distorted public pay growth at 6.1%. This lifted overall earnings (excluding bonuses) to 3.5%, but Reuters noted that this is more about timing than underlying momentum.