UK Unemployment Rate Rises; Wage Growth Slows
The increase in the UK unemployment rate and the marginal slowdown in wage growth in the three months to February suggest an easing of pressure in the labor market.
The ILO jobless rate rose to 4.2 percent from 3.9 percent in three months to January, the Office for National Statistics reported Tuesday. The rate was seen at 4.0 percent.
In the first quarter, vacancies decreased by 13,000 sequentially to 916,000. This was the 21st consecutive decline in vacancies but it is still above pre-pandemic levels.
In the three months to February, average earnings including bonus grew 5.6 percent from a year ago, slightly faster than the 5.5 percent expected expansion.
At the same time, excluding bonus, average earnings gained 6.0 percent annually, slightly slower than 6.1 percent in the preceding period.
However, after taking into account the inflation rate, regular wages grew only 2.1 percent.
Despite signs of a cooling jobs market, wage growth which is temporarily stuck in the 6 percent area is the another reason for the Bank of England to wait until August to cut rates for the first time, ING economist James Smith said.
Capital Economics’ economist Paul Dales said the sharp decline in employment and the surge in the unemployment rate in February indicate that wage growth will continue to ease even though the pace of decrease appears to have eased.
“As long as that’s matched by a further easing in CPI inflation, then the Bank of England may be ready to cut interest rates in June even if the Fed is not willing to move until September,” Dales added.
Data from the ONS showed that the number of workers on payroll declined 67,000 to 30.3 million in March.
The claimant count increased by 10,900 on the month to 1.583 million in March. Economists had forecast a monthly increase of 17,200.
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