Today's labour market data shows ongoing real wage growth alongside a rise in zero-hours contracts.

Isaac Stell, Investment Manager at Wealth Club said:

“The UK’s latest labour market data points to growing signs of economic strain and an absence of momentum.

"Although the employment rate saw a slight increase in June, rising to 75.3%, this comes against a backdrop of weakening economic activity and falling demand. One of the clearest indicators of this slowdown is the continued decline in job vacancies, which have now fallen for the 37th consecutive period across most sectors.

"Both the Chancellor and the Bank of England will have their eyes firmly fixated on wage growth which slowed to 4.6%. This deceleration signals weakening employer confidence and reduced capacity to offer competitive compensation. This will of course raise concerns about household spending power and with it broader economic resilience. With tax rises in autumn looming, the data is unlikely to re-gain momentum from here.”

TUC General Secretary Paul Nowak said:

“It is welcome that wages continue to grow and that employment rates are still rising.

“However, years of Tory cuts and underinvestment have left big challenges in the jobs market – including continued growth in the use of insecure zero hours contracts.

“The government is raising national investment, repairing public services, and improving the support people need to get into work. This is putting Britain on the road to recovery.

“But more is needed. Bold action must continue to match the size of the problems we face. This should include improved support for disabled workers and a comprehensive youth guarantee.”

On the latest zero-hours contracts figures, which show more than a million workers employed on a zero-hours contract, Paul added:

“There are still far too many people trapped on zero-hours contracts, unsure of how much they’ll make from one week to the next.

“But Tory and Lib Dem Lords have been voting to block new rights for workers to a proper contract with regular hours. The sight of hereditary Peers voting against workers’ rights belongs in another century.

"Working people need the Employment Rights Bill delivered in full.”

Jane Gratton, Deputy Director of Public Policy at the British Chambers of Commerce said:

“With businesses feeling the heat from a raft of cost-pressures, a larger easing of average earnings, including bonuses, to 4.6% in June will be welcomed.

“Continued wage growth is creating real challenges for business and the wider economy. It’s an important factor behind persistent services inflation, as the Bank of England Governor told our conference in June. That’s why employers and the Bank will be watching the path of annual earnings very closely, as further interest rate cuts are considered.

“It’s also impacting on job opportunities. While unemployment remains fairly stable, we know many businesses have held back on recruitment and others have shed jobs - following the national insurance hike earlier this year. Labour costs remain the biggest cost pressure for firms, cited by 73% of respondents in our latest survey.

“There is a limit to how many additional costs businesses can absorb. It’s crucial that there are no more taxes on business in the forthcoming budget. Whether it’s young people entering the labour market, people looking to return to work, or those wishing to develop in their career – they all rely on thriving businesses. The government must help, not hinder, businesses to attract and retain the people and skills needed to grow our economy.”

Alex Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors, said:

"Today's data points to a further weakening in employer demand for labour, with payrolled employees decreasing on the year by 0.5% and vacancies down by 44,000 (5.8%) on the quarter.

"This continued softening of the labour market is a direct result of policies which are increasing the cost and risk of employing staff. The recent increase in Employer National Insurance Contributions, alongside employment law reforms and above-inflation increases to the National Living Wage, have substantially weakened the business case for hiring.

"Government action to restore business confidence in hiring is urgently needed. IoD research in July found that two thirds (64%) of directors cited addressing the cost of employment as a top-three action government could take to support their business. As a first step, government should support key amendments to the Employment Rights Bill recently passed in the House of Lords. These include reducing the qualifying period for unfair dismissal from two years to six months rather than to day one, and reinstating the 50% voting threshold for industrial action."