Reacting to the latest ONS Labour Market data published this morning, Jane Gratton, deputy director public policy said: “The small uptick in unemployment and decline in payrolled employees suggests some further loosening of the labour market. Businesses will welcome a further fall in the rate of inactivity.

“Despite some easing, wage pressures remain stubborn, increasing costs for businesses. Many firms are telling us they are being forced to raise prices, put recruitment and investment plans on hold and look for ways to reduce their costs.  There is a limit to how much additional cost they can absorb.

“Recruitment difficulties are also weighing hard on businesses, with our latest research showing that over three quarters of SMEs are still struggling to find staff with the skills they need.

“Further employment costs are also on the horizon for firms. The increase in employer National Insurance contributions, the rise in the National Living Wage announced in the Budget, and the Employment Rights Bill will add further financial pressures.

“It’s crucial that the government takes steps to minimise the combined impact of recent policy changes and announcements on business. We need urgent action to drive growth, tackle the skills crisis, boost workforce health and reduce inactivity in the labour market.”