"October's labour market data reveals clear signs of strain in the UK economy. The unemployment rate has risen to 5.1%, its highest level in several years, as unemployment creeps ever closer to the pandemic high of 5.3%. This signals that employers are now responding more decisively to weaker demand and higher financing costs. At the same time, regular pay (excluding bonuses) grew by 4.6% year-on-year."
"Consumer demand is likely to remain fragile for 2026 With more people out of work and limited wage growth, household spending power could stay weak well into 2026. Business confidence will remain subdued. Higher unemployment often leads firms to delay investment decisions until demand stabilises. A slower growth environment is likely. The labour market data suggest the economy may struggle to gain momentum, even if interest rates are cut when the Bank of England and the MPC meet for the last time this year"
"This adjustment is consistent with an economy operating under tight monetary policy and persistent uncertainty around global demand and the future of workplace technology. Although regular earnings remain positive in nominal terms, the deceleration in pay growth indicates that households are unlikely to see a meaningful improvement in real incomes over the coming months, especially if energy and housing costs remain elevated. This combination of higher unemployment and subdued wage momentum is likely to place renewed pressure on con"
Consumer demand is likely to remain fragile into 2026 as higher unemployment and limited wage growth reduce household spending power. The unemployment rate rose to 5.1%, nearing the pandemic peak of 5.3%, signalling employers are responding to weaker demand and higher financing costs. Regular pay excluding bonuses grew 4.6% year-on-year, but the pace of increase is slowing, indicating easing wage pressures tied to softer economic conditions rather than productivity gains. Redundancies are increasing and vacancies are falling as firms scale back hiring and delay investment decisions. The macroeconomic backdrop is tilted downward, making labour market stabilisation a core priority.
Read at London Business News | Londonlovesbusiness.com
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