UK economy sheds jobs for fifth consecutive month in June

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UK payroll employment fell for the fifth consecutive month in June and wage growth slowed, in the latest sign that the government’s tax rises, a higher minimum wage and the US trade war are hitting the jobs market.

Employers cut the number of payrolled staff by 25,000 between April and May, the Office for National Statistics said on Thursday, revising its previous estimate of a 109,000 drop. 

Early estimates for June showed a further 41,000 decline, leaving payrolled employment down by 178,000 or 0.6 per cent from June 2024, although these figures for the latest month are likely to be revised. 

Wages growth eased, with average earnings excluding bonuses 5 per cent higher in the three months to May than a year earlier — down from annual growth of 5.3 per cent in the three months to April. 

The combination of persistent wage pressures and rising unemployment underscores the dilemma facing the Bank of England as policymakers consider when to next cut interest rates.

Yael Selfin, chief UK economist at KPMG, said a significant weakening in demand for workers since April’s tax and wage changes would “open the door” for the Monetary Policy Committee to cut interest rates in August.

Unemployment rose to 4.7 per cent in the three months to May, up from 4.6 per cent a month earlier, according to the ONS headline measure based on its labour force survey.