Wage growth across Britain has slowed, according to new figures, as the labour market cools and companies cut jobs. The latest data from the Office for National Statistics shows that annual growth in employees’ average earnings, excluding bonuses, eased to 4.8% in the May-to-July period, down from 5% a month earlier.
With inflation having risen to 3.8% in July, the slowdown in earnings growth will squeeze household finances further. Pay rose faster in the public sector, up 5.6% year on year, compared with 4.7% for the private sector.
The ONS also reported that company payrolls shrank by an estimated 142,000 in the year between July 2024 and July 2025, a sign that firms have been cutting back on hiring amid economic uncertainty and higher employers’ national insurance rates. The number of job vacancies fell by 10,000 to 728,000 in the three months to August, marking the 38th consecutive quarterly decline.
Liz McKeown, the ONS director of economic statistics, said: “The labour market continues to cool, with the number of people on payroll falling again, while firms also told us there were fewer jobs in the latest period. This weakness is reflected in a slight increase on the quarter in the unemployment rate. The number of vacancies also fell on the quarter, though the rate of decline appears to be slowing. Wage growth excluding bonuses edged down further in cash terms, though it remains strong by historic standards.”
