UK Unemployment Rate Rises; Wage Growth Slows

(RTTNews) - The UK jobless rate rose slightly, and wage growth softened in the three months to August, raising chances of an interest rate cut this year.

The ILO jobless rate rose slightly to 4.8 percent from 4.7 percent in the preceding period, the Office for National Statistics reported Tuesday. The rate was seen unchanged at 4.7 percent.

In the three months to August, average earnings excluding bonuses increased 4.7 percent from a year ago, in line with the forecast, and weaker than the 4.8 percent rise posted in the three months to July. Including bonuses, average earnings grew 5.0 percent, which was much faster than forecast of 4.7 percent.

The number of vacancies decreased 9,000 to 717,000 in the three months to September. This was the 39th consecutive period where vacancy numbers have dropped compared with the previous three months, the ONS said.

Payrolled employees decreased 31,000 sequentially in the June to August period, data showed.

An estimated 15,000 working days were lost because of labor disputes in August.

Although a rate cut is possible in December, the next move will be in February as it gives an extra month's worth of data to look at before acting, ING economist James Smith said.

The economist expects three cuts in 2026, which is more than markets are currently pricing.

"We would normally expect a loosening of the labor market to lead to an easing in average earnings," British Chambers of Commerce Deputy Director of Public Policy Jane Gratton said.

"But, while the rate of growth has slowed, they remain above inflation, adding to pressure on businesses' balance sheets," Gratton added.