UK Labour Market Remains Weak but Stable as Burnham Begins Premiership

Britain's labour market showed little change during the three months ending in May, with wage growth and unemployment remaining broadly stable, according to data released by the Office for National Statistics (ONS). Payroll employment in June also stayed largely unchanged despite recent political changes in the country.

Average regular earnings, excluding bonuses, increased by 3.4% compared with a year earlier, matching the growth recorded in the previous three-month period. The figure marked the joint-lowest rate of wage growth since October 2020 and was in line with economists' expectations.

The unemployment rate held at 4.9% for the three months to May, slightly below forecasts that had projected a modest increase. However, unemployment among people aged 16 to 24 climbed to 16.4%, the highest level recorded since 2014.

The figures were released shortly after Andy Burnham assumed office as Britain's new prime minister. His government announced measures aimed at reducing household energy bills and said a long-term national plan would be presented later this year.

Economists said employers remain cautious because of continued cost pressures and uncertainty surrounding the government's future economic policies. Data also showed private-sector wage growth slowed to 2.9%, its weakest pace since 2020.

The Bank of England is expected to leave interest rates unchanged at 3.75% at its upcoming meeting while monitoring whether higher energy costs linked to the Iran conflict create longer-term inflation pressures. Market expectations currently suggest one or two quarter-point rate increases before the end of 2026.

Separate tax office data indicated that the number of employees on company payrolls declined by 4,000 in June. Earlier payroll estimates for May were also revised upward.