Business news live: UK unemployment at four-year high with firms ‘feeling the heat from raft of cost-pressures’

US firms are likely to benefit from pre-Christmas certainty in a boost overall for global economy, after an extension was agreed between Donald Trump and China over a trade deal.

The extension should allow firms to plan and buy in from overseas ahead of the important Christmas period, without fears of raised tariffs making products more expensive.

Susannah Streeter, head of money and markets, Hargreaves Lansdown, explains the situation:

“There’s more optimism in the air as a tariff truce between the US and China holds, with hopes the global economy will withstand the trade blow a little better.

“Oil prices have crept higher in expectation of higher demand for energy around the world. The FTSE 100 has opened higher, even though the UK labour market shows more signs of deterioration. Nevertheless, the picture is broadly stable, and investors appear to be taking a glass half full approach to the snapshot.

“A longer-lasting trade deal with between China and the US looks to be on the cards, after Trump granted another extension to talks amid a warming up of relations between the two nations.

“The delay on imposing crippling US tariffs on Chinese goods will be welcome news, especially for American retailers in the run-up to the crucial Christmas season. It will enable companies to import clothing electronics and toys at a lower tariff rate of 30%, and will provide much needed certainty, at least for the short term, on costs.”

As noted earlier, it’s not just that unemployment remains at elevated levels – the number of vacancies they can turn to is also diminishing.

Danni Hewson, AJ Bell head of financial analysis, explains the dilemma businesses are facing right now.

“In a nutshell, if you are looking for a job today, you’re going to find it much tougher than you would have just a year ago,” she said.

“Firms have had to shoulder big tax and wage increases; they’re worried that further tax hikes could be coming down the track and they’re being cautious.

“That caution is manifesting itself in recruitment decisions. They’re putting off taking on new staff and they’re not replacing many of those who leave.

“There will be plenty of speculation about the role AI might be playing in those decisions, but money will be at the forefront of employers’ minds and the cost of labour has weighed on firms’ ability to grow.

“It’s a slow erosion rather than a seismic shock, but the cooling trend will undermine any expectation that the supercharged growth that the government promised just a year ago might be rediscovered at the back end of the year.

“It’s not surprising that the decline has been concentrated in the narrow-margined retail and hospitality sectors.

“There are some areas of growth, in particular the numbers employed in health and social work has increased but that has been offset by declines elsewhere.”

As a reminder, the triple lock on state pensions means it rises each year by whichever is highest out of: inflation, wage growth or 2.5%.

That means today’s wage data is important and will factor in to potential calculations for the state pension’s change in payments.

“This isn’t the crunch month for the triple lock, but we’re not far off now,” explained Sarah Coles, head of personal finance at Hargreaves Lansdown.

“Total pay is up 4.6% in the year to April-June, and it’s the May-July figure that counts for the triple lock. Pay growth has eased in recent months, and if this trend continues, we can expect wage inflation to be between 4% and 4.5% when it counts.

“Given that the Bank of England forecasts inflation at 4%, we might expect the state pension to rise by between 4% and 4.5% – to between £12,451 and £12,512.

“This would bring it within touching distance of the personal allowance – so anyone with even a very modest personal pension income could end up paying income tax.”

Jobs figures released today make it unlikely we’ll see an interest rate cut by the Bank of England next month, the Institute of Chartered Accountants in England and Wales say.

We’ll preface this by laying out: very few analysts have been expecting one straight after the August cut.

That was even less likely following the two-vote close call we got last week.

A quarterly rate cut has been the theme all year, making November always the more likely date to look at for the next one.

Still, the ICAEW are a noted organisation and the explanation behind jobs cuts is well worth a note.

Suren Thiru, ICAEW Economics Director, said:

“These figures signal growing turmoil in the UK labour market, with April’s leap in employment costs and a flagging economy pushing more businesses to actively cut headcount and cap pay awards.

“Wage growth is likely to weaken over the course of the year as softening economic conditions, rising redundancies and elevated staffing costs increasingly hinder pay settlements.

“The UK jobs market is facing more pain in the coming months with higher labour costs likely to lift unemployment moderately higher, particularly given growing concerns over more tax rises in this Autumn’s Budget.

“While these disheartening figures will reassure rate-setters that last week’s policy loosening was the right call, the pace at which the labour market is currently cooling is unlikely to be sufficient to prompt another rate cut in September.”

As a KPMG study lays bare years of falling job openings, and with the unemployment figure refusing to shrink, Britain’s bosses are stuck in hiring limbo that only Rachel Reeves can get them out of, says James Moore…

Unemployment rates remained the same and job vacancies fell – but annual growth in earnings grew over the past three months to continue to paint a difficult picture for UK businesses.

The Office for National Statistics (ONS) said the rate of UK unemployment struck 4.7 per cent in the three months to June. It was the same as the previous three-month period, which had been highest level since June 2021.

Meanwhile, average earnings growth, excluding bonuses, remained at 5 per cent for the period.

It came as UK job vacancies tumbled by 44,000 over the three months to July to 718,000 – the lowest number of job openings since April 2021.

While fewer job opportunities would of course become problematic over the longer term, this year the Bank of England – and thus the wider economy – has been more troubled by the rate of wage growth, which contributes to stoking high inflation levels. That has appeared to be dropping off recently, with employers cutting back on new hires due to other expenses including hiked National Insurance and minimum wage payments.

The FTSE 100 has risen this morning, up 0.3 per cent in early trading.

Spirax Group is the biggest riser with a 16% surge after reporting this morning.

Germany’s DAX is almost flat but France’s CAC 40 is up 0.5% so far, after rises in Asia overnight.

The Nikkei 225 rose 2.15%, with smaller gains for the Hang Seng, Asia Dow and Australian ASX200.

Growth in the retail sector is “barely touching the sides” when it comes to costs, bosses have warned

July retail sales were up 2.5 per cent on a year ago but they were not close to covering the the last budget’s £7 billion in new costs on the sector.

The uptick in the UK’s total retail sales was against growth of 0.5 per cent last July and the 12-month average growth of 1.9 per cent, according to British Retail Consortium (BRC)-KPMG data.

Food sales increased by 3.9 per cent on last July due to warm weather and a packed sporting schedule, although rising food inflation – now at 4 per cent, according to latest BRC figures – meant increased spending was more a result of higher prices than improved demand.

The Office for National Statistics (ONS) said the rate of UK unemployment struck 4.7% in the three months to June.

It was the same as the previous three-month period, which had been highest level since June 2021.

Meanwhile, average earnings growth, excluding bonuses, remained at 5% for the period to June.

It came as UK job vacancies tumbled by 44,000 over the three months to July to 718,000 – the lowest number of job openings since April 2021.

Good morning – jobs market news, companies updates, stock market latest and more all coming for you today.

As ever, our business and money blog will tell you what’s going on and what it means for you.