According to data released by the Office for National Statistics (ONS) on Tuesday, U.K.’s unemployment rate rose to 4.2 percent in the three-month period ending in February. This represents the highest level in nearly six months, up from 3.9 percent in the three months to January.
The increase in the unemployment rate was higher than most economists had anticipated. The consensus forecast had been for a more modest rise to around 4 percent.
We’ve published the latest UK labour market figures.
Headline indicators for the UK labour market for December 2023 to February 2024 show:▪️ employment was 74.5%
▪️ unemployment was 4.2%
▪️ economic inactivity was 22.2%➡️ https://t.co/TllNpQLjtS pic.twitter.com/rsTVAKMbfE
— Office for National Statistics (ONS) (@ONS) April 16, 2024
Read more: U.K.’s economic recovery bolstered as GDP surges in January
The ONS data also showed that regular wage growth, excluding bonuses, slowed to 6 percent in the three months to February, down from 6.1 percent in the prior three-month period.
However, when factoring in the decline in inflation as measured by the Consumer Prices Index (CPI), real regular wage growth actually reached 2.1 percent – the highest level in almost two-and-a-half years. This suggests that the squeeze on household purchasing power is starting to ease despite the higher unemployment.
In October 2023, the U.K. saw a significiant drop in inflation. The annual rate of consumer price inflation in the U.K. plummeted to 4.6 percent, down from 6.7 percent in September. This represented the smallest increase in consumer prices in two years. Investors responded by increasing their expectations of interest rate cuts from the Bank of England in the year ahead.
For more news on the economy, click here.
