Britain's jobs market showed further signs of a slowdown as employment fell and growth in wages cooled, according to official data published on Tuesday that is likely to reassure the Bank of England that inflation pressures are waning.
Economists said the figures reflected concerns among employers about a tax increase imposed on them by finance minister Rachel Reeves and over U.S. President Donald Trump's trade war.
Provisional tax authority data showed the number of employees fell by 33,000 in April after a 47,000 drop in March.
Vacancies fell further below their pre-COVID pandemic level as they fell by 42,000 - the most in more than a year - in the three months to April to 761,000, the Office for National Statistics said.
Average weekly earnings, excluding bonuses, rose by 5.6% in the first three months of 2025 compared with the same period last year, the slowest increase since the three months to November last year, the ONS said.
A Reuters poll of economists had pointed to regular wage growth of 5.7%.
"While the labour market continues to slow, and there is some evidence of the impact of the increase in national insurance ... there is nothing to suggest it immediately fell off a cliff in response to the shock," Luke Bartholomew, deputy chief economist at fund management firm Aberdeen, said.
"Combined with the better trade news recently, there is nothing here to make the Bank of England regret its decision to say the easing cycle will continue to be only 'gradual'," Bartholomew said.
Private-sector pay excluding bonuses - a gauge of domestic inflation pressure watched closely by the BoE - also rose by 5.6%, weaker than an increase of 5.9% in the three months to February.
The BoE is monitoring the inflation pressures in Britain's labour market closely as it considers whether to speed up its pace of interest rate cuts to shield the economy from the fallout from Trump's policies.
Jack Kennedy, senior economist at global jobsite Indeed, said the BoE was likely to remain on guard about the risks posed by still high wage growth in Britain.
Last week, the central bank's Monetary Policy Committee split three ways on its May interest rate decision with five members backing a quarter-point cut, two favouring a bigger half-point reduction and two voting to keep rates on hold.
"A more material and sustained cooling of wage pressures would open the door to faster interest rate cuts, but the MPC's split vote in May underlines the continued caution over persistent inflation pressures," Kennedy said.
The ONS said Britain's unemployment rate, which is based on a survey that is being overhauled and is no longer considered an accurate gauge of the jobs market, rose to 4.5% from 4.4%, in line with the Reuters poll.
Sterling was little changed after the data was published.
(Writing by William Schomberg; editing by Sarah Young and Andrew Heavens)
Copyright (2025) Thomson Reuters.
This article was written by Suban Abdulla and William Schomberg from Reuters and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.