The UK job market is cooling further, but high wage increases may cause the Bank of England to remain cautious.

Due to the burden of increased taxes on employers and the impact of U.S. government tariffs, the UK job market cooled off again last month, which may give the Bank of England some relief in terms of weakening inflation pressures. Temporary data released on Tuesday by the tax office showed that after a decrease of 47,000 employees in March, the number of employees decreased by nearly 33,000 in April. In the three months leading up to April, the number of job vacancies decreased by 42,000, marking the largest decline in over a year, with the total dropping to 761,000, further below pre-pandemic levels. Meanwhile, in March, excluding bonuses, average wages in the UK a measure tracked by the Bank of England to gauge domestic inflation pressures rose by 5.6% year-on-year, below economists' expectations of 5.7% and the previous value of 5.9%, marking the lowest increase in three months since November of last year. Following the data release, there was almost no change in the bets on the scale of interest rate cuts by the Bank of England for the remaining time this year in the pound and financial markets. Luke Bartholomew, Deputy Chief Economist at fund management company Aberdeen, said, "Despite continued slowing in the labor market and the impact of the increase in national insurance taxes, there is no indication that the labor market is suddenly collapsing due to shocks." He added, "Combined with recent positive news on the trade front, there is currently no reason for the Bank of England to regret its decision to continue pushing forward with 'gradual' easing." The Bank of England is closely monitoring inflation pressures in the UK labor market, while considering whether to accelerate the pace of interest rate cuts to protect the economy from the impact of Trump's policies. The Bank of England cut interest rates by the expected 25 basis points last week, bringing the rate down to 4.25%. However, the Monetary Policy Committee (MPC) of the Bank of England was divided: five members supported a 25 basis point rate cut, two members supported a larger 50 basis point cut, and two members advocated keeping the rate unchanged. Clare Lombardelli and Megan Greene, policymakers, pointed out on Monday that there are inflation risks in the labor market, and wage growth is still too high compared to the Bank of England's 2% inflation target. However, policymaker Alan Taylor stated that the "quite dangerous" trade situation was one of the reasons he voted for a 50 basis point rate cut. Senior economist at global recruitment platform Indeed, Jack Kennedy, suggested that the Bank of England may continue to be vigilant against the persistent risk of high wage growth in the UK. He said, "If wage growth pressure eases to a greater extent and in a sustained manner, it could open the door for faster rate cuts, but the Monetary Policy Committee's split vote in May reflects a cautious stance towards sustained inflation pressures."