UK Jobless Rate Rises; Wage Growth Softens

(RTTNews) - The UK unemployment rate rose slightly in the three months to April period and wage growth softened as the rise in social security contribution and the minimum wage started to weigh on the labor market activity.

The ILO jobless rate rose to 4.6 percent in the three months to April, as expected, from 4.5 percent in the three months to March, data from the Office for National Statistics revealed Tuesday. Average earnings excluding bonuses climbed 5.2 percent from a year ago but slower than the forecast of 5.5 percent. Including bonuses, average earnings grew at a slower pace of 5.3 percent in the three months to April from the previous year. The rate came in line with expectations.

During three months to May, the number of vacancies declined 63,000 from the previous quarter to 736,000. This was the 35th consecutive quarterly decline.

In May, payroll employment decreased 109,000 from the previous month to 30.2 million. This was the biggest fall since May 2020.

Data showed that about 47,0000 working days were lost due to labor disputes in April. British Chambers of Commerce Deputy Director Public Policy Jane Gratton said the increase in employment costs for business appears to be starting to bite with today's data showing a rise in unemployment.

Gratton noted that the steep increase in national insurance and the national living wage have undoubtedly delivered a shock of businesses.

She noted that vacancies continued to decrease and wage growth continued to outpace inflation, adding further cost pressures for firms already facing rising overheads.

ING economist James Smith said the cooling in the UK jobs market is gathering pace. "While the bar for the Bank of England to speed up rate cuts seems to be set fairly high, this data helps cement cuts in August and November," Smith added.