UK employment figures fall as pay growth slows

The UK's unemployment rate has slightly decreased, according to official figures. Unemployment stood at 4.2% in the three months ending in June, down from 4.4% in the previous quarter.

Meanwhile, wage growth continued to decelerate, increasing at an annual rate of 5.4%—the slowest pace in nearly two years.

The Office for National Statistics (ONS) noted that despite some positive indicators, the jobs market showed signs of "cooling," with an increase in job vacancies, rising redundancies, and a persistently high number of people not actively seeking work.

The ONS has advised caution in interpreting its current job figures, noting that the Labour Force Survey, which generates the data, has had a lower-than-usual number of respondents over the past year.

These figures could open the door for additional interest rate cuts by the Bank of England later this year.

In a closely contested decision earlier this month, policymakers reduced the interest rate to 5% from 5.25%—the first cut in over four years. The Bank has kept rates elevated in an effort to curb inflation across the economy.

However, this has also increased borrowing costs for consumers and driven up wages, which, while beneficial for workers, may have led businesses to reduce hiring. The ONS reports that estimated job vacancies in the UK dropped by 26,000 to 884,000 in the three months leading up to July.

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