The UK unemployment rate unexpectedly fell to 4.2%, while wage growth slowed to its lowest level in nearly two years, official data showed on Tuesday.
The UK Office for National Statistics said in a statement that the unemployment rate for the second quarter was 4.2%, compared with 4.4% in the three months to the end of May. Analysts had generally expected the unemployment rate to rise slightly.
It added that wage growth, excluding bonuses or benefits, slowed to 5.4% from 5.8% in the same period, the lowest level since August 2022.
"The number of job vacancies continues to fall, although the total number remains above pre-pandemic levels," said Liz McEwen, director of economic statistics at the ONS.
Inflation figures are due out this week on Wednesday, followed by second-quarter growth figures on Thursday.
The data combined could provide clues about the pace of future interest rate cuts by the Bank of England.
“A further softening in wage growth would be welcomed by the BoE as evidence of continued labour market slack,” said Ruth Gregory, deputy chief UK economist at research group Capital Economics.
“This supports our expectation that the BoE will deliver two more 25bp rate cuts later this year,” she added.
The BoE earlier this month cut borrowing costs (interest) for the first time since the start of the Covid pandemic in early 2020.
This came after UK inflation fell sharply from its highest levels in four decades.
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