UK Wage Growth Slows as Labour Market Cools, Official Data Shows

UK wage growth eased further in the latest data, signalling a cooling labour market as employers slow hiring amid weaker economic conditions.

London — Wage growth in the UK slowed again in the three months to October, adding to evidence that the labour market is losing momentum after a prolonged period of tight conditions.

Average earnings excluding bonuses rose at a slower annual pace compared with the previous period, while pay growth including bonuses also moderated. The figures suggest pressure on employers to raise wages is easing as demand for workers softens.

Signs of a cooling jobs market

The data showed a further decline in job vacancies, extending a trend that has been underway for more than a year. While employment levels remain relatively high, the pace of hiring has slowed across several sectors, including retail, hospitality and professional services.

Economists said the combination of slower wage growth and falling vacancies points to reduced strain in the labour market, following sharp pay increases seen during the post-pandemic recovery.

Implications for inflation and interest rates

Cooling wage growth is likely to be welcomed by policymakers, who have highlighted pay pressures as a key driver of persistent inflation. Slower earnings growth could help ease inflationary risks in the services sector, where labour costs are a major factor.

However, analysts cautioned that real wage gains remain modest once living costs are taken into account, limiting the boost to household spending.

Outlook for workers and employers

Employers are increasingly cautious about expanding payrolls as economic growth remains subdued. At the same time, workers continue to face pressure from elevated housing and energy costs, despite some improvement in headline inflation.

The data reinforces expectations that the labour market will continue to soften into early 2026, with pay growth gradually returning closer to long-term averages.

Source & Editorial Transparency:

This article is based on publicly available information, including reporting from multiple reputable news organisations and official sources.

It has been rewritten, contextualised, and editorially reviewed by the AI News UK Editorial Desk.