New labour market data from the ONS shows average earnings growth, including bonuses, slowed to 4.6% in June. Despite this easing, businesses continue to face significant cost pressures, with labour costs remaining the largest challenge.
Many firms have delayed hiring or reduced jobs in response to increased expenses, including the impact of earlier national insurance changes. Unemployment rates remain relatively stable but recruitment activity has softened.
Labour costs were identified as the top concern by 73% of businesses surveyed. The combination of wage growth and other rising expenses is contributing to ongoing inflation in the services sector, influencing monetary policy decisions.
With further interest rate adjustments under consideration, employers and policymakers are closely monitoring wage trends. Business groups stress the importance of avoiding additional taxes on companies in upcoming budgets to support job creation and economic growth.
A strong business environment is seen as essential for attracting and retaining workers across all career stages, which in turn supports broader economic development.
