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UK labour market stuck while inflation watch keeps MPC sidelined

The UK jobless rate held at 4.9% and payrolled employees fell by 13k month on month, but vacancies and the claimant count showed early stabilization signals.

Reported · Written up by our desk · Major Pairs

FXStreet highlights Deutsche Bank’s view that the UK economy may have exceeded expectations, but the labour market remains broadly stagnant. The jobless rate is stuck at 4.9%, HMRC payroll data showed a 13k drop in monthly payrolled employees, and private sector wage growth has continued to slow.

The bank points to slowing wage growth, citing Average Weekly Earnings easing to 2.8% on a three-month year on year basis. At the same time, it describes tentative stabilization in labour market indicators, including job vacancies slowing to 707k in the three months to July and the vacancy to unemployment ratio remaining stable at 0.4.

Deutsche Bank also notes fewer downside labour market signals, with redundancies rising? not stated as rising, but redundancies over the same period slowing to 106k, the lowest level since July 2025. It also cites the claimant count falling from 4.4% to 4.3%, alongside improvements in underemployment to 8.0% in Q2-26 from 8.6% in Q1-26 and job churn rising to 2.4% in Q2-26.

With markets turning toward key inflation data, FXStreet reports Deutsche Bank expects the Monetary Policy Committee to stay on the sidelines for now. The article says weak headline labour market indicators are likely to limit near-term MPC movement even as some stabilization signs emerge.

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