Unemployment rate falls again and wage growth slows – what it means for your money

UNEMPLOYMENT has fallen again and wage growth continued to show signs of slowing, new data has found.

That's according to official figures released today by the Office for National Statistics (ONS).

The ONS has published its latest wage figuresCredit: Alamy

Wages, excluding bonuses, grew by 5.1% from May to July.

The last time growth was lower than this was in April to June 2022, when it was 4.7%.

The latest wage growth data has particular significance for pensioners as it could decide how much the state pension rises next April.

The triple lock sees the state pension rise in line with whatever is highest out of: wages, 2.5% or September's inflation figures.

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The latest inflation figures for August are set to be announced next week if things continue the way they are going, wages will remain the higher figure when the state pension increase is revealed.

Meanwhile, the rate of UK unemployment fell for the second month in a row.

Figures released today show the rate dipped to 4.1%, down again on the previous month's reading of 4.2%.

This is down from 4.4% for the three months prior to this.

The latest figures from the ONS also estimate that there were 857,000 job vacancies in June to August 2024, down 42,000 on the quarter and 143,000 on the year.

However, this is still 61,000 above pre-Covid levels.

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Liz McKeown, director of economic statistics at the ONS, said: "Growth in total pay has slowed markedly again as one-off payments made to many public sector workers in June and July last year continue to affect the figures.

“Basic pay growth also continued to slow, though less sharply."

She added: "When taken together on a comparable basis, our different measures all show growth in the number of employees over the latest quarter, though annual growth has slowed over the year.”

UNEMPLOYMENT RATE FALLS

Lower unemployment rates are good news as it means more people are in work and earning money.

It also means more money is being pumped into the economy which can see GDP rise.

When GDP goes up, it means the economy is growing and the Government has more funds to spend on public services.

That means more money pumped into local libraries, schools and transport networks.

It can also see taxes fall as the Government has less of a need to top up its coffers.

SLOWING WAGE GROWTH

While wages are rising, they are are going up at a slower rate than before.

Steady growth is expected to keep up with rising prices so that workers are not worse off.

In recent years wage growth has been higher as employers have bumped up pay to keep up with runaways inflation.

The rate of inflation has now fallen back to the Bank of England's target of 2%, though new figures are set to be released tomorrow and experts expect a small increase to 2.3%..

Rising wages can fuel inflation.

The Bank of England (BoE) has previously hiked interest rates to tackle high inflation, hitting a 16-year high of 5.25%.

At the start of August it made its first cut to 5% after inflation hit its 2% target.

The move brought relief for millions facing high mortgage rates, which are based on the BoE rate.

What it means for your money

Mike Ambery, retirement savings director at Standard Life, part of Phoenix Group said today's figures mean that pensions will rise by £460 next year.

He said: "This inflation-beating uplift will be some comfort for pensioners grappling with high energy prices and, for those not claiming pension credit or other benefits, staring into their first winter without the £300 fuel allowance. "

"However, a new state pension of £11,962.60 will also be 95% of the personal allowance, currently frozen at £12,570 until 2028 – by contrast, in 2021/22 the new state pension was equivalent to 74% of the allowance. "

"This means pensioners will need just £607.40 of other income before paying income tax," he added.