UK employers reduced the number of job vacancies in the three months to May, according to official figures, as the labour market showed further signs of strain amid global instability including conflict in the Middle East. Unemployment held steady at 4.9%, unchanged from April, underscoring the difficult economic backdrop facing new prime minister Andy Burnham as he pushes a 10-year plan to raise living standards across the country.

Vacancies fell to 712,000, roughly half the level recorded in 2022, while private sector earnings growth slowed to 2.9%, leaving overall average pay growth, including bonuses, at 4.3% – below economists' forecast of 4.5%. Analysts had also expected unemployment to rise to 5%. ICAEW chief economist Suren Thiru warned the figures point to a "fragile" labour market, with high employment taxes, regulation and uncertainty curbing hiring, and cautioned unemployment could edge higher over the summer. The weaker pay growth is expected to ease pressure on the Bank of England over interest rates.