The ONS has released employment and wage data covering the year to April-June: Labour market overview, UK - Office for National Statistics
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
What it means for rates
“There’s not much reason to be cheerful given the latest snapshot of the labour market. Although the picture has stayed relatively stable, unemployment has risen fractionally and stands at 4.7%. Vacancies are still dwindling and there’s mounting evidence that companies are increasingly cautious, hesitant about expanding and are battening down the hatches in an uncertain economic world. They’re not recruiting new staff, or replacing those who leave.
Demand is being squeezed out of parts of the economy, but not everywhere. Services inflation has been running at 4.7% and looks set to stay sticky. Although pay growth has slowed, it’s now pretty static, and is still outstripping inflation, so there’s a risk that firms will pass on heavier costs as higher prices. Bank of England policymakers struck a more cautious tone than expected at the last meeting when it comes to future policy, and this jobs snapshot doesn’t change the overall picture too much. It’s touch and go as to whether there will be a cut in November but December is looking a bit more likely.”
Sarah Coles, head of personal finance, Hargreaves Lansdown:
What it means for pensions
“This isn’t the crunch month for the triple lock, but we’re not far off now. Total pay is up 4.6% in the year to April-June, and it’s the May-July figure that counts for the triple lock. Pay growth has eased in recent months, and if this trend continues, we can expect wage inflation to be between 4% and 4.5% when it counts. Given that the Bank of England forecasts inflation at 4%, we might expect the state pension to rise by between 4% and 4.5% - to between £12,451 and £12,512. This would bring it within touching distance of the personal allowance – so anyone with even a very modest personal pension income could end up paying income tax.
The Bank of England expects inflation to ease in the coming months, so that by the time we get to the state pension rise in April next year, this increase might be well ahead of annual price rises at the time. Of course, this is only part of the picture. Inflation has been particularly focused on household bills and food prices, which pensioners on lower incomes spend a larger proportion of their income on. It means many of those who rely heavily on the state pension will be holding their breath for the rise in the spring.
What it means for working people
This isn’t a massive deterioration, but with unemployment creeping up very slightly, and vacancies dropping yet again, the jobs market is a rough place to be. Unemployment has been trending up for three years and is now higher than before the pandemic. Vacancies have also fallen for a notable 37th month running. The ONS says that companies are culling recruitment and not replacing staff after they leave. As a result, there are 2.3 unemployed people per vacancy.
For anyone looking for a job, the environment is particularly difficult. For younger people, fewer graduate jobs are creating all sorts of pressures, both for the graduates themselves and for those competing with graduates for the entry-level jobs they eventually turn to. For older people, being thrown back into job hunting is a huge culture shock now that AI has transformed both the jobs and the recruitment market.
Losing work has a horrible impact on your financial resilience. The HL Savings and Resilience Barometer shows that among people who are out of work, only 26% have enough emergency savings, while less than 1% have enough money left at the end of the month to be resilient. For those still in work, it’s vital to consider your safety net and whether you can boost it in case life takes a turn for the unexpected.
Advisers recommend having an emergency savings safety net big enough to cover 3-6 months’ worth of essential spending – in a competitive easy access savings account - so you’re in better shape to deal with whatever is on the horizon.
If you lose your job, it’s vital to cut your costs as fast as you can. If you’re worried about missing bills or debt repayments, talk to the companies you owe money to, because it’s far better to agree a payment plan than it is to miss bills.”
|
