UK unemployment hits highest since August 2021
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The news: The UK’s unemployment rate rose for the third month running to hit its highest level in four years, while wage growth slowed more than expected.
The numbers: Headline unemployment increased to 4.5% in the three months to March, from 4.4% the previous quarter. Job vacancies continued to fall in the quarter, to 5.3% month-on-month as jobs in construction, manufacturing and transport slowed to pre-pandemic levels.
UK wage growth was at 5.5% including bonuses, ahead of the 5.2% expected. Excluding bonuses, wages grew by 5.6%, below the 5.7% Bloomberg economists predicted. The finance and business services sector had the lowest wage growth in regular pay at 4%.
The context: UK companies are bearing the weight of higher national insurance contributions which took effect in April, a measure brought in by Treasurer Rachel Reeves in her October Budget, as well as a rise in the national minimum wage.
The Bank of England cut rates by 0.25 percentage points to 4.25% last week, but two members of the reserve bank’s Monetary Policy Committee warned on Monday that the BoE should be cautious about further cuts without evidence of persistent inflationary pressures. Other rate setters have expressed concerns about costs being borne by businesses as well as trade uncertainty adding to unemployment increases.
The source: Office for National Statistics
