Workers saw strong pay growth in late 2024, with wages rising faster than expected despite concerns that the Autumn Budget would lead to job losses. Figures from the Office for National Statistics (ONS) show that the average weekly earnings increased by 6% from the three months to December, up from 5.6% in November, exceeding economists’ forecasts. Regular pay, excluding bonuses, rose from 5.6% to 5.9%.

Unemployment remained steady at 4.4%, defying predictions of a small rise to 4.5%. The number of job vacancies increased slightly from 818,000 in December to 819,000 in January, staying above pre-pandemic levels despite a gradual decline since 2022.

While business surveys had suggested job cuts at the fastest rate since 2009, the jobs market has held up better than feared. Payroll numbers dipped by 14,000 in December but have remained largely stable since mid-2024.

Economists, however, warn of signs the labour market is cooling. A £25 billion rise in employers’ national insurance and a 6.7% minimum wage increase from April could trigger redundancies, with low business confidence.

The ONS has acknowledged concerns about the accuracy of its employment data, raising fears that policymakers are making decisions with flawed information. Meanwhile, inflation is set to rise, with forecasts predicting an increase from 2.5% in December to 2.8% in January, adding further pressure on households and the Bank of England’s rate-setting decisions.

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