Rise in unemployment shows UK jobs market is cooling, but it is not collapsing
Anaemic economic growth, rising inflation, and a worsening outlook in the jobs market.If the inheritance from the Conservatives had been bad, the situation a year in to the new Labour government does not look much better.The latest figures show unemployment nudged up to 4.7% in May, hitting the highest level in four years, while wage growth slowed for a third consecutive month, and employers cut back on hiring.Given the cocktail of economic concerns facing Britain, a slowdown in the labour market is hardly surprising.
Employers are facing higher costs from inflation, tax rises and elevated interest rates; squeezed consumers are not rushing to spend, and Donald Trump’s trade wars are clouding the outlook.However, it would be remiss to describe the slowdown in the jobs market as a capitulation.Despite the clear pressures, wage growth remains surprisingly resilient and redundancy rates, although elevated, are not rocketing.“From our perspective it is holding quite steady given the circumstances,” said Michael Stull, managing director at the recruitment firm ManpowerGroup UK.“Even with the UK’s inflation rise and negative economic growth, there are signs of returning confidence.
”Business groups have complained since Rachel Reeves’s autumn budget that her £25bn increase in employer national insurance contributions (NICs) and 6.7% rise in the “national living wage” would force them to cut jobs and raise prices for consumers.Bosses often play up such concerns to gain a lobbying advantage.But on this occasion, the evidence would suggest a clear impact from the chancellor’s tax-raising measures.Figures released on Wednesday showed inflation rose by more than expected in June as firms passed on higher employment costs to the price of restaurant meals, hotel stays and supermarket groceries.
The latest figures showing a 41,000 fall in the number of workers on company payrolls in June are also a worry.Job vacancies are falling most in the sectors most exposed to higher costs, including hospitality and retail.There are also concerns that firms are employing artificial intelligence rather than hiring real humans.However, within the labour market data there are conflicting messages.Both unemployment and employment rose at the same time.
This is partly down to more people moving out of economic inactivity – when working-age adults are neither employed nor looking for work.But there are also serious questions over the reliability of the data, given the well-documented troubles at the Office for National Statistics.To read the 7am labour market release is to be served a dog’s breakfast without a plate or cutlery; full of caveats about revisions, poor data collection and volatility.A clear direction of travel does, however, emerge when piecing together a wide range of data sources.Despite the cooling jobs market, workers are still getting reasonably robust pay settlements.
Annual growth in total pay, at 5%, might be lower than in recent months, but is well above inflation and far-stronger than anything seen in the 2010s.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionThe strong wage growth has caused a headache for the Bank of England by stoking inflationary pressures, putting further interest rate cuts at risk after four reductions in the past year.With inflation now running at 3.6%, and predicted to edge further away from the Bank’s 2% target over the coming months, Threadneedle Street faces a tough job at its next monetary policy meeting on 7 August.The evidence of a further slowdown in the jobs market, coupled with lacklustre economic growth, should however tip the balance.
Most economists reckon the Bank will announce a quarter-point cut from the base rate of 4,25%,For the government a further cut in borrowing costs would be a welcome crumb of comfort to cling to, before a tricky autumn budget and growing speculation about tax rises,While there are hopes of a recovery in household and business confidence, the cooling, but not collapsing, British jobs market shows there is still plenty of work to do to turn around the country’s economic fortunes,
White House seeks inspection of Fed building as Trump piles pressure on Powell
The White House is pushing for an inspection of the US Federal Reserve headquarters in Washington after Donald Trump suggested the central bank had mismanaged funds for building renovations.The scrutiny comes as Trump has unsuccessfully tried to pressure the Fed chair, Jerome Powell, to quit and demanded he and other officials lower interest rates. Powell has said that lowering rates prematurely could lead to higher inflation, and that Trump’s tariffs had contributed to price increases.In response to the Fed chair’s resistance, Trump has threatened to fire Powell multiple times.Yesterday, after reports that Trump floated the idea of firing Powell to House Republicans, Trump said: “I don’t rule out anything, but I think it’s highly unlikely unless he has to leave for fraud
‘Worse than Covid’: hospitality bosses blame Reeves’ budget for UK downturn
“From a financial point of view, last year’s budget was worse for hospitality than Covid,” says Philip Thorley, who owns 18 pubs across Kent and employs about 400 people.Usually he is looking to recruit staff to help out in the summer months but this year will be different, he says, as the £25bn increase in employers’ national insurance contributions (NICs) that came into force in April has been “catastrophic for our company and industry”.He says the fact that Thorley Taverns is now taxed at about £8,000 a week, totalling more than £400,000 a year, means it cannot afford to take on anybody new during busier months. Current staff will have to work harder, Thorley adds, and the extra pressure could affect customer service levels and opening times.“This affects anybody in retail, in the high street and other entry-level jobs, especially young people,” he says
OpenAI launches personal assistant capable of controlling files and web browsers
Users of ChatGPT will be able to ask an AI agent to find restaurant reservations, go shopping for them and even draw up lists of candidates for job vacancies, as the chatbot gains the powers of a personal assistant from Thursday.ChatGPT agent, launched by Open AI everywhere apart from the EU, not only “thinks” but also acts, the US company said. The agent combines the powers of AI research tools with the ability to take control of web browsers, computer files and software such as spreadsheets and slide decks.It follows the launch of similar “agents” by Google and Anthropic as interest grows in AI models that can handle computer-based tasks by judging which software is best to use and toggling between systems to autonomously complete assignments like drafting travel itineraries or carrying out work research.“The hope is that agents are able to bring some real utility to users – to actually do things for them rather than just outputting polished text and sounding impressive,” said Niamh Burns, senior media analyst at Enders Analysis
UK’s £225m AI supercomputer, Isambard-AI, launches in Bristol
Britain’s new £225m national artificial intelligence supercomputer will be used to spot sick dairy cows in Somerset, improve the detection of skin cancer on brown skin and help create wearable AI assistants that could help riot police anticipate danger.Scientists hope Isambard-AI – named after the 19th-century engineer of groundbreaking bridges and railways, Isambard Kingdom Brunel – will unleash a wave of AI-powered technological, medical and social breakthroughs by allowing academics and public bodies access to the kind of vast computing power previously the preserve of private tech companies.The supercomputer was formally switched on in Bristol on Thursday by the secretary of state for science and technology, Peter Kyle, who said it gave the UK “the raw computational horsepower that will save lives, create jobs, and help us reach net zero-ambitions faster”.The machine is fitted with 5,400 Nvidia “superchips” and sits inside a black metal cage topped with razor wire north of the city. It will consume almost £1m a month of mostly nuclear-powered electricity and will run 100,000 times faster than an average laptop
The Open 2025: first round updates as Fitzpatrick shares lead at Royal Portrush – live
We’ve had 16 rounds in the 60s today. Can Rory make it 17? A birdie would do it and, from an upslope in the lighest of rough, his approach to the last finds the front of the putting surface. A birdie looks unlikely from there – it’s nearly 45 feet away – but you never know with McIlroy. Rory raises his putter and soaks in the adulation as he strides up to the green. Very different emotions to 2019 when he just wanted to get the hell out of there after a 79
Scheffler and Lowry ride out storm while Morikawa gets bogged down again
It was grin-and-bear-it weather during the first morning of the Open, the sort that makes you question why you ever thought a British seaside holiday was a good idea to begin with. The first shower blew in right around the time Scottie Scheffler got to the 1st tee. He had the air of a stubborn parent who had made the mistake of hauling their kids out in the heedless belief that it was going to clear up any minute, and was now determinedly leading them into the local folk museum that had been recommended by the holiday home owners. Scheffler gritted his teeth and got on with it, pretending he was enjoying himself.“Was there a shot that stood out today for you, that you were really pleased with?” Scheffler was asked after his round
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