PwC comments on ONS November 2024 Labour Market data

Commenting on the latest ONS labour market data, Gora Suri, economist at PwC UK, said:

“The labour market continues to loosen, with vacancies dropping further, though still slightly above pre-pandemic levels. The unemployment rate also ticked up slightly to 4.3%.

“But wage growth is proving to be a little more persistent. Annual growth in employee’s total earnings is up to 4.3%, reflecting the civil service one-off payments made in the summer. Despite a loosening labour market, nominal pay growth remains in excess of the circa 3% level that is considered to be consistent with the Bank’s 2% inflation target. Real pay continues to grow given that inflationary pressures have fallen back at a faster pace than wage growth.

“Looking ahead, businesses are likely to face increasing cost pressures. Almost simultaneously, they have been hit with a trifecta of policy changes which raise their costs - an increase in employer NICs, a rise in the National Living Wage and the Employment Rights Bill. If businesses pass some of this onto workers, this could weigh on pay growth in the short to medium term.”