Despite the suspension of the Labour Force Survey (LFS) by the Office for National Statistics (ONS) over data quality concerns, alternative experimental measures suggest that the unemployment rate in Scotland remained at 4.2% in the third quarter, unchanged from the previous one.

The employment rate saw a marginal dip to 75.7%, while the inactivity rate stayed consistent. Job vacancies have declined to their lowest since spring 2021, hinting at a slight cooling in the demand for labour.

Pay growth continued to be robust, with regular pay rising by 7.7% year-on-year in Q3, though there was a slight deceleration from the previous quarter’s figure of 7.8%. The private sector experienced a more noticeable slowdown in pay growth. These trends align with the Bank of England’s observations and suggest wage growth is easing but still above the inflation target, providing no clear direction for adjustments in interest rates.

Scotland’s payrolled employees have reached record numbers, as highlighted by the latest HMRC early estimates.

Jill Mackay, savings specialist at Scottish Friendly, commented: “In the public sector, annual pay excluding bonuses increased by 7.3% in the three months to September, the highest rate since comparable records began in 2021. Meanwhile, the private sector registered average wage growth of 7.8% over the period, one of the largest increases outside of the coronavirus pandemic.

“However, when adjusting for inflation, real wage growth in the UK excluding bonuses is up by only 1.3% on average, which suggests that many workers might not being seeing any noticeable difference in their pay at all.

“There is still not a lot of breathing space for many families on lower and middle incomes who are facing the prospect of higher energy bills as we head into winter and the New Year.”

Ms Mackay concluded: “If inflation continues to fall, then we may see interest rates soften and that could ease some of the pressure on households but there is still a bumpy road ahead.

“The net result is that many families are finding it harder to save and invest, and in some cases will be becoming more reliant on credit to help make ends meet.”