UK Employment Data Reveals a Mixed Labour Market Landscape

July UK Employment: A Bit of a Roller‑Coaster

Unemployment dropped again – it’s now at 4.1% for the three months to July, the lowest since January.
The biggest month‑on‑month fall in thirteen years came last June, so the trend is pretty solid.

The ONS understands that data quality hiccups can muddy the picture. Take what you read with a dash of skepticism.
Average earnings grew by only 5.1% YoY – the slowest pace since June 2022 – and overall pay (including bonuses) rose by 4.0% – a lull that hasn’t been seen since November 2020.
These numbers still outpace what the Bank of England (BoE) wants from a hotter earnings climate.

BoE policy is unlikely to change dramatically. Policy makers are more cautious about employment data these days.
During the August meeting, four MPC members opted to keep the Bank Rate steady. Even those who supported a 25‑basis‑point cut in September stayed wary of lingering inflation.
Given the current outlook, quarterly 25‑bp cuts remain the baseline – likely to be confirmed after the Bank’s updated forecast. A November cut is the probable final move this year.

With the BoE potentially holding a tighter stance than the ECB or the FOMC (where a 50‑bp September cut is still on the table), the GBP might gain a leg up against the Euro and Dollar in the medium term.
However, a significant fiscal tightening in the upcoming October Budget could be a major risk, possibly sending a “slamming the brakes” warning straight to the Treasury.