Tue Oct 14 07:10:00 UTC 2025: ## UK Wage Growth Cools Slightly Amidst Stabilizing Job Market
**London -** UK wage growth saw a marginal slowdown over the summer, according to the latest data released by the Office for National Statistics (ONS). Average wage growth in the three months to August registered at 4.7%, a slight dip from the 4.8% recorded in the three months to July. Simultaneously, the national unemployment rate edged up to 4.8%, from 4.7%.
The ONS data, released today, suggests a stabilization in the UK jobs market after a period of significant volatility. Job vacancies have continued their downward trend, falling by 1.3% (9,000) in the three months to September, marking the 39th consecutive period of decline.
“After a long period of weak hiring activity, there are signs that the falls we have seen in both payroll numbers and vacancies are now levelling off,” stated Liz McKeown, the ONS’s Director of Economic Statistics. McKeown also highlighted a disparity among age groups, with the rise in unemployment primarily affecting younger individuals.
While the number of economically inactive individuals due to student status or retirement decreased, this was offset by an increase in inactivity due to long-term illness and other reasons. The ONS advises caution regarding the unemployment rate, citing concerns about data quality and promising to take steps to address these.
Despite the slight cooling, private sector earnings growth, while the lowest in four years at 4.4%, remains above inflation (3.8%). Public sector wage growth, however, remained significantly higher at 6%, a figure influenced by the earlier payment of some public sector pay rises in 2025 compared to 2024. The wholesale, retail, hotel, and restaurant sector saw the strongest regular annual growth rate after the public sector.
Experts are divided on the implications of the data. Ashley Webb, an economist with Capital Economics, believes that the still-high wage growth may deter the Bank of England from cutting interest rates before the year’s end. Conversely, Chris Hare, a senior UK economist at HSBC, sees the data as indicative of a stable labour market and anticipates a gradual easing in cost pressures and wage growth.
The ONS also reported an increase in redundancies, rising to 3.8 per 1,000 employees between June and August.
The revised figure for wage growth (4.8%) will likely be a key factor in calculating next year’s state pension increase under the “triple lock” policy. With inflation currently at 3.8%, real wage growth – the improvement in workers’ living standards after accounting for inflation – sits at a modest 0.9%.
The Liberal Democrats have criticized the figures, arguing that real wage growth is barely keeping pace with inflation. Similarly, the Resolution Foundation described real wage growth as “paltry,” highlighting that real weekly wages have only increased by £1.50 since last September.
Charlie McCurdy, an economist at the Resolution Foundation, stated, “The UK’s longstanding weakness in the jobs market has finally caught up with pay packets. The deteriorating labour market, coupled with persistently high inflation, means that cost of living pressures are likely to build over the autumn.”
The report also pointed to growing concerns about household debt, rising energy bills, increasing mortgage rates, and a rise in homelessness deaths, underscoring the ongoing economic challenges facing many Britons. Furthermore, Kemi Badenoch’s announcement of a potential Conservative government plan to scrap stamp duty has sparked debate about its potential impact on the housing market.
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