PwC comments on July 2024 ONS Labour market data

Commenting on the latest ONS labour market data, Jake Finney, economist at PwC UK, says:

“The latest labour market data continues to be more awkward for the Bank of England than the inflation data. The labour market is clearly cooling - with unemployment rising and vacancies falling - but pay growth still remains elevated at 5.7%, way in excess of the circa 3% level that is considered to be consistent with the 2% inflation target. This still remains one of the largest potential barriers to an August rate cut. 

“Persistently high levels of economic inactivity, particularly amongst younger and older workers, continues to hold back the recovery. Our latest UK Economic Outlook shows that higher prevalence of mental health conditions amongst young people has likely contributed to the rise in inactivity. Nearly 40% of 18 to 24 year olds not in work tell us they would be more likely to return to work if their future employer provided mental wellbeing support.”