The UK labour market slowed further in April, hit by a double whammy of spiking tariffs-related uncertainty and a policy-driven hike in employment costs that took effect last month. While the figures point to a continued gradual cooling rather than a nosedive, lingering uncertainty likely to drag on hiring and potentially feed into higher joblessness remains a concern.
The recently announced US-UK trade deal has calmed anxieties somewhat, especially in the most-exposed sectors, including cars and steel, but general business confidence has taken a bruising lately. Meanwhile, questions over the shape of the government’s Employment Rights Bill represent a further potential headwind for an already fragile recruiting landscape.
Wage growth eased further in the three months to March and is gradually coming off the boil, though at 5.6% year-on-year for regular pay, it remains too hot for the Bank of England’s liking. A more material and sustained cooling of wage pressures would open the door to faster interest rate cuts, but the Bank’s Monetary Policy Committee’s split vote in May underlines its continued caution over persistent inflation pressures.
