The job market in the UK is starting to look a bit shaky. New numbers show that right before the big budget update in November, fewer people were being hired. In fact, the amount of people on official company payrolls took a sharp dive. It was the biggest monthly drop we have seen since the end of 2020. This suggests that both bosses and workers are facing a much tougher time right now.
There was a lot of worry in the air before the new Finance Minister gave her big speech. Even though the overall economy grew a little bit in November, the job market did not follow along. Instead, it kept losing steam. This has sparked new fears about whether companies will want to hire anyone new or if they will keep pay raises low for the people who already have jobs.
The tax office reported that December saw 43,000 fewer people on payrolls than the month before. This is a big deal because we haven’t seen a drop this large in several years. Sometimes these early numbers get changed later when more data comes in, but the trend still looks downward. It seems like the frantic hiring we saw in the past is definitely over for now.
While more people are out of work, the unemployment rate is staying steady at about 5%. The real story is in the paychecks. In the private sector, raises are getting smaller. Pay went up by about 3.6% recently, which sounds okay, but it is actually the slowest growth in three years. When you look at the whole country, pay growth is cooling down across the board.
The people who track these stats say that shops and restaurants are being hit the hardest. These businesses are cutting back because people aren’t spending as much money. Since these jobs often go to part-time workers or people who don’t earn as much, it makes things extra difficult for them. Most businesses are being very careful about spending any extra cash right now.
Because pay isn’t going up as fast, the experts think interest rates might start to fall. High interest rates have been making everything more expensive for a long time. Now that wages aren’t pushing prices up as much, the Bank of England might feel safe enough to lower rates. Investors are already betting that we will see at least one or two cuts to interest rates sometime this year.
