Private sector pay growth in Britain slowed to its weakest pace in almost six years in the three months to June, while unemployment held at 4.9% and vacancies fell again, adding to evidence that employers remain cautious about hiring.
Figures released on 18 August by the Office for National Statistics show a labour market that is no longer deteriorating sharply, but is offering fewer clear signs of momentum. For workers, the picture is mixed: regular pay is still rising, yet the private sector is losing speed and the number of open roles continues to narrow.
Private sector wage growth loses pace
Private sector regular earnings rose by 2.8% year on year in the three months to June, according to figures reported alongside the latest UK labour market release. Reuters reported that this was the weakest private sector regular-pay growth since October 2020.
Across the economy, annual regular earnings growth excluding bonuses stood at 3.5%. The contrast with the public sector was pronounced, with public sector pay growth substantially stronger after the timing of NHS and other pay awards.
For jobseekers, private sector pay matters because it is often a faster indicator of how confidently employers are competing for staff. A slowdown does not mean salaries are falling, but it can reduce the pressure on employers to raise offers quickly or make aggressive counteroffers to retain staff.
Vacancies fall to 707,000
The estimated number of vacancies fell to 707,000 in the three months to July. Reuters described this as the lowest level since early 2021 and, excluding the pandemic period, the lowest since late 2014.
The decline extends a long cooling trend in recruitment. British Careers reported earlier this month that permanent hiring had stabilised after a prolonged decline, but stabilisation in placement activity has not yet translated into a broad rebound in vacancies.
That distinction matters. A recruitment market can stop worsening without becoming strong. Employers may still replace essential departures or recruit selectively while holding back on wider expansion.
Unemployment remains at 4.9%
The unemployment rate remained at 4.9% in the three months to June, rather than falling to 4.8% as economists polled by Reuters had expected. Employment and economic inactivity measures were also broadly steady.
The ONS continues to advise users to consider Labour Force Survey estimates alongside administrative payroll data, vacancies and other labour-market indicators because survey response issues have made some detailed estimates more volatile than in the past.
That caution is especially important when interpreting single-month movements. The broader pattern across the data is clearer than any one figure: hiring demand is subdued, vacancy levels are low by recent standards and private sector wage pressure has eased.
What the figures mean for careers
For people considering a move, the latest data point to a more selective market rather than a frozen one. Applicants may face longer hiring processes and stronger competition for well-paid roles, particularly where employers believe they can recruit without offering large salary premiums.
Workers already in post may also find that external salary benchmarks are rising more slowly than they did during the tighter labour markets that followed the pandemic. That can make evidence of responsibilities, specialist skills and measurable performance more important in pay discussions.
The figures do not suggest that hiring has stopped. They do suggest that employers have more room to be patient. For candidates, the practical consequence is a market in which role fit, sector demand and demonstrable skills are likely to matter more than assumptions that a general shortage of staff will lift all offers.
The independent Reuters report on the 18 August labour-market figures also noted that financial markets are watching the weaker private sector wage data closely because it feeds into expectations for inflation and Bank of England policy.
