The rate of unemployment fell slightly in the three months to August, but real wage growth fell.

The Office for National Statistics (ONS) has released its latest data about the employment and labour market, and found that unemployment was at 4%, down 0.1% on the previous numbers and below pre-pandemic levels.

In Scotland the growth in the number of payrolled employees was 0.2%, down slightly from 0.3%.

However, the figures varied across the country, with a 0.9% increase in both Orkney and Shetland and 1% in Falkirk, while there was a fall of 0.5% in East Ayrshire & North Ayrshire and Glasgow City showed no change.

The UK employment rate (for people aged 16 to 64 years) was estimated at 75.0% in June to August 2024, above estimates of a year ago, and increased in the latest quarter.

The ONS data showed vacancies falling by 34,000 to 841,000 in the quarter to September, which is the lowest level since March to May 2021, while workers on UK payrolls also fell by 35,000 between July and August.

However, earnings growth slowed.

Early estimates for September 2024 indicate that median monthly pay was £2,397, an increase of 5.3% compared with the same period of the previous year but down on July and August.

Median monthly pay grew 4.3% in June and 5.5% in July 2024 compared to 9.3% and 8.1% for the same months in the previous year.

But earnings growth continues to outstrip inflation, as pay increased by 2.6% in the three months to August with Consumer Prices Index inflation taken into account.

Higher median wages were seen in and around London and the South-East.

David Freeman, head of the ONS labour market and household division, said: “Pay growth slowed again, with last year’s one-off payments made to many public sector workers continuing to affect the figures for total pay.

“However, earnings continue to rise faster than inflation.”

Work and Pensions Secretary, Liz Kendall MP said: “To get Britain growing again we need to get Britain working again. Millions of people are locked out of work due to long term sickness. This is not good for them, for our economy or for the taxpayer.

“That’s why we will bring forward the biggest reforms to employment support in a generation – overhauling jobcentres, delivering a Youth guarantee so every young person is learning or earning, and new work, health and skills plans to tackle inactivity – unlocking opportunity and potential in every area of the country.”

Michael Brown, senior research strategist at Pepperstone said: "Unemployment, in the three months to August, ticked lower to 4.0%, the lowest level since January, though concern remains over the unreliability of the data, due to the ongoing, and well-documented, data collection issues with the ONS' Labour Force Survey. Policymakers, hence, are likely to place relatively little weight on this aspect of the report.

"Earnings growth, meanwhile, continued to cool, with overall pay rising by 3.8%, and regular pay by 4.9%, both on an annual basis, the former being just a touch hotter than consensus expectations, albeit still representing the slowest such increase in almost four years, back to November 2020. Furthermore, such an increase points to a pace of real earnings growth that is broadly compatible with a sustainable return to the 2% inflation aim.

"Nevertheless, a degree of upside earnings risk does remain, particularly as the impacts of a host of inflation-busting public sector pay increases, introduced during the summer by the new Labour government, won't feed into the figures until the fourth quarter, potentially giving the MPC's hawks some cause for caution.

"Overall, though, this morning's figures change little in terms of the BoE policy outlook, with the near-term pace, and magnitude, of Bank Rate cuts hinging largely on the degree of underlying inflation persistence within the economy, as opposed to any Labour market developments. As a result, tomorrow's September CPI figures will be closely watched by participants, and have much greater potential to be a game-changer in terms of the outlook.

"For now, my base case remains that the MPC will deliver this cycle's second 25bp cut at the November meeting, likely via another split vote. Beyond that, the December meeting is something of a coin-flip, particularly after Governor Bailey's recent remarks about the possibility of being "a bit more activist" in terms of delivering rate cuts. Were the pace of inflation to prove quicker than the Bank's forecasts, of which a new round is due next month, then another cut in December would become considerably more likely."