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UK jobless figures hint at market slowdown

By Julian Shea in London | China Daily Global | Updated: 2024-04-17 03:04

A commuter cycles across London Bridge in the City of London, UK, on Tuesday. [Photo/Agencies]

Unemployment in the United Kingdom has hit the highest level for six months, according to newly published figures, ahead of expectations, at the same time as wage growth has declined slightly, suggesting a cooling of the employment market that could encourage a cut in interest rates, which are currently at 5.25 percent.

Data from the Office for National Statistics showed that the number of people out of work in the period from December to February was 1.4 million, and unemployment rate increased to 4.2 percent, while those with work fell, and those known as the economically inactive — neither working nor seeking to — went up.

There are around 850,000 more people of working age who are not seeking work or are unable to start doing so than before the start of the novel coronavirus pandemic, with a rise in long-term sickness being blamed.

Tony Wilson, director at the Institute for Employment Studies, called the latest unemployment figures "surprisingly poor" but said the "most concerning" factor was the number of economically inactive people.

He also noted that the jobs market data was "very volatile so don't read too much into short-term changes … but the trend is clearly poor".

The picture on wage growth is more complex, with average growth going from 6.1 percent to 6 percent, but when inflation is factored in, it means that real wages rose by 1.9 percent in the three months to February, the biggest increase since the fall of 2021.

"With employment falling sharply and the unemployment rate climbing, we suspect wage growth will continue to ease in the coming months," chief UK economist at Capital Economics, told the BBC. "That may allow the Bank (of England) to cut interest rates in June."

Yael Selfin, chief economist at KPMG UK, was cautiously optimistic, telling The Guardian newspaper that "the exact timing of the first rate cut will be a hot debate for the (Bank of England) monetary policy committee in the coming months".

Having peaked at 11.1 percent in October 2022, inflation has been coming down for some time, with February's rate being 3.4 percent, and a further fall is expected when the latest figures are published on Wednesday.

At the start of 2023, Prime Minister Rishi Sunak issued five policy pledges on which he told voters "I fully expect you to hold my government and I to account on delivering".

One of these was halving inflation, which in the three-month period before that speech, was at 10.7 percent, so with local elections taking place across the country in less than a month's time, that progress will be well-timed news for the government.

However, some work still remains to be done to reach the 2 percent target figure of the central bank, the Bank of England.

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