UK wage growth slowed to its lowest for more than two years as the rate of unemployment also unexpectedly dropped, official figures have shown.
The Office for National Statistics (ONS) revealed that regular wage growth, excluding bonuses, was 5.4 per cent year on year over the three months to June.
This slipped from 5.8 per cent in the previous three months and represented the smallest increase since the period to July 2022.
Wage growth including bonuses fell from 5.7 per cent to 4.5 per cent, with the sharp fall attributed to the one-off impact of NHS bonuses awarded last year.
When adjusted for inflation, annual growth for regular pay (excluding bonuses) was 2.4 per cent in April to June, and for total pay was 1.6 per cent.
It means many Britons were continuing to experience an improvement in their standard of living.
The easing of wage growth could encourage the Bank of England to continue cutting interest rates as it looks to keep inflation at its 2 per cent target.
The ONS figures also showed the rate of unemployment was 4.2 per cent over the three months to June, dropping from 4.4 per cent over the previous three months.
This was despite a consensus of economists having predicted an increase for the quarter.
Estimates for the number of payrolled employees in the UK increased by 14,000 between May and June 2024, the ONS said.
But another decline in vacancy rates also showed continued pressure in the UK jobs market.
The number of vacancies in the UK decreased by 26,000 to 884,000 for the three months to June.
Chancellor Rachel Reeves, who is preparing for her first Budget on 30 October, said: ‘Today’s figures show there is more to do in supporting people into employment because if you can work, you should work.
‘This will be part of my Budget later in the year where I will be making difficult decisions on spending, welfare and tax to fix the foundations of our economy so we can rebuild Britain and make every part of our country better off’.
ONS director of economic statistics Liz McKeown said: ‘Basic pay growth, while remaining relatively strong, continues to slow.
‘Growth in total pay slowed markedly, with last year’s one-off NHS bonuses affecting the comparison.
‘The number of job vacancies continues to decline, although the total number remains above pre-pandemic levels.’