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UK Job Market Weakens as Vacancies Fall and Wage Growth Slows. The UK’s job market continues to show signs of weakening, with a decline in payroll numbers and a drop in job vacancies in early 2025, according to the latest data from the Office for National Statistics (ONS). The ONS report suggested that the increase in employer National Insurance contributions and the National Living Wage in April might be influencing the labour market’s slowdown. Wage growth slowed in the first quarter of 2025 but remained ahead of inflation, with regular earnings growing at an annual rate of 5.6%, indicating that pay is still rising but at a slower pace. The unemployment rate in the UK rose to 4.5% during the January to March period, up from 4.4%, though the ONS cautioned that these figures should be treated with caution due to low survey response rates. The number of employees on companies’ payrolls dropped by 47,000 in March and 33,000 in April, highlighting a weakening labour market despite the ongoing rise in wages. Job vacancies in the UK also continued to fall, with the number of vacancies declining by 42,000 to 761,000 between February and April 2025, further reflecting the cooling job market. Analysts pointed out that changes to tax and the minimum wage in April could be contributing to reduced recruitment, with businesses adjusting their hiring plans in response to these policy shifts. A separate survey painted a grim outlook, showing a record low in the number of employers planning to hire more staff in the next three months, signaling a lack of confidence in future hiring. Despite slowing wage growth, the UK’s relatively strong wage increases are keeping the Bank of England cautious about future interest rate cuts, as it closely monitors inflationary pressures. Economists predict that the Bank of England will continue its “gradual and careful” approach to interest rate cuts, balancing the need to address inflation while responding to a softening labour market.
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