UK jobless rate rises again but pay growth will keep Bank of England on edge
Britain’s unemployment rate rose for a second month in a row and there were other signs of a cooling labour…
Britain’s unemployment rate rose for a second month in a row and there were other signs of a cooling labour market in data published on Tuesday, including an increase in older people saying they were looking for work.
But the Bank of England – which looks set to raise interest rates for the ninth consecutive meeting on Thursday – was likely to note the strongest rise in basic pay on record not including the period around the COVID-19 pandemic.
Sterling rose against the U.S. dollar and the euro after the figures were published by the Office for National Statistics.
The ONS said the unemployment rate increased to 3.7% in the three months to October, up from 3.6% in the three months to September.
But regular pay rose by a stronger-than-expected 6.1% in the August-to-October period, the biggest gain since records began in 2001 excluding jumps during the COVID-19 period which were distorted by lockdowns and government support measures.
Total pay including bonuses also increased by an annual 6.1%, the ONS.
Both measures of pay continued to lag behind inflation, representing a cut to spending power for households.
The ONS said the economic inactivity rate – or the share of people not in work and not looking for it – fell in the three months to October to 21.5%, 0.2 percentage points lower than the previous three-month period.
The fall was driven mostly by more older people who had considered themselves retired but were now looking for work.
“This tallies with other data which suggest more people in their 50s are thinking of going back to work, at a time when the cost of living is rising rapidly,” ONS statistician Sam Beckett said in a statement.
However, the inactivity rate was 1.3 percentage points higher than before the pandemic.
The BoE fears the shrinking of the pool of workers in the labour market will add to inflation pressure in the economy.
In another sign of caution among employers with the economy already believed to be in recession, vacancies in the three months to November were lower than they were a year earlier, the first annual fall since early 2021.
Economists polled by Reuters had expected the jobless rate to increase to 3.7% from its previous reading of 3.6%.