PwC comments on April 2024 ONS labour market statistics

Commenting on the latest ONS labour market data, Jake Finney, economist at PwC UK, says:

“The latest data suggests the UK labour market continues to cool, albeit at a gradual pace considering the strain the economy has been under over the past few years. The unemployment-to-vacancies ratio, a key measure for the Bank of England, ticked up to 1.6 in the three months to February 2024 as unemployment increased and vacancies fell further. 

“One lasting aftereffect of recent economic crises has been rising economic inactivity. There are now around 850,000 additional working-age people out of work, who are no longer seeking work or are unable to start work, than before the pandemic began. We expect this is being driven primarily by higher levels of long-term sickness amongst both younger and older workers. 

“Pay growth has also remained at stubbornly high levels, though it continues to moderate as the labour market cools. High pay growth remains a key barrier to base rate cuts as the Bank of England expects it is contributing to inflation persistence. However, the one upside is that households could see significant real wage growth on an annual basis this year for the first time since 2021.”