"The labour market continues to show signs of strain, as unemployment rose to 4.8% in August. Hiring momentum has slowed across most sectors, with many employers holding off on new recruitment or scaling back hours instead of making redundancies. While this suggests a degree of resilience, it also signals that businesses are operating with caution amid fragile demand, elevated borrowing costs, and uncertainty ahead of the Autumn Budget."
"The debate around AI rages on, and while some businesses are claiming that their entry-level recruitment is slowing as AI proves able to complete the more menial tasks that are often the responsibility of these employees, the more important driver of this is hiring costs. The increase in the minimum wage and employer NICs have made it difficult for businesses to invest in young talent,"
"Pay growth, meanwhile, continues to ease over the medium to long-term. Regular pay (excluding bonuses) rose by 4.7%, notably slower than in mid-2024 and the slowest growth since May 2022. Public sector pay, lifted by recent settlements in education and health, remains stronger but the overall trend points to cooling wage pressures. The slowdown will have direct implications for the Chancellor's fiscal strategy. Weaker earnings growth could reduce income tax receipts, while persistently high unemployment will increase welfare spending -"
Unemployment rose to 4.8% in August, indicating strain in the labour market. Hiring momentum has slowed across most sectors as employers delay recruitment or reduce hours instead of making redundancies. Businesses are operating cautiously amid fragile demand, elevated borrowing costs, and uncertainty ahead of the Autumn Budget. Entry-level opportunities for graduates and non-graduates are deteriorating as higher minimum wage and employer NICs raise hiring costs and limit investment in young talent. Regular pay excluding bonuses rose 4.7%, the slowest growth since May 2022, while public sector settlements keep pay stronger in education and health. Slower wage growth reduces tax receipts and higher unemployment raises welfare spending, complicating fiscal plans and potentially influencing Bank of England rate timing.
Read at London Business News | Londonlovesbusiness.com
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