Jake Finney, economist at PwC, said:
“The job market data indicates that the labour market recovery is starting to run out of steam, as the unemployment rate increased for the first time since 2020, rising from 3.7% to 3.8% in the three months to April. Evidence that the labour market is starting to cool - combined with the latest GDP figures showing real GDP contracting in April - should lower the probability of a 50 basis-points hike by the Bank of England this week.
“The real wage squeeze continued to tighten, as total pay declined by 2.7% year-on-year - its largest fall for almost a decade. The highest earners were the only group to see their pay packets grow by more than inflation in April, while the lowest earners saw the sharpest fall in their real earnings.
“We expect that unemployment could continue to rise, as headwinds from the war in Ukraine reduce demand for labour. The delayed impact is because the labour market tends to lag behind the rest of the economy.”
Annual nominal pay growth, three months to April 2022
Sources: ONS, PwC analysis
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