Wage growth has slowed to its lowest rate in nearly two years as the job market continues to cool. Earnings increased at an annual rate of 5.7% in the three months leading up to May but are still outpacing rising prices.

According to the Office for National Statistics (ONS), job vacancies have decreased, and the growth in the number of employees on payrolls has slowed. The unemployment rate remained at 4.4% during the same period.

“We continue to see signs of a cooling labor market, with payroll employment growth weakening over the medium term and unemployment gradually rising,” stated Liz McKeown, ONS director of economic statistics.

From April to June this year, job vacancies fell by 30,000 to 889,000, primarily in the retail and hospitality sectors. Although vacancies have been decreasing for two years, they remain above pre-pandemic levels.

Ms. McKeown added that while earnings growth remains relatively strong, it is showing signs of slowing. “However, with inflation falling, in real terms, wage growth is at its highest rate in over two and a half years.”

After accounting for inflation, real wages increased by 3.2%.