UK unemployment rises to a four-year high as firms cut back on hires

Euronews

2 days ago

The unemployment rate in the UK rose to 4.6% in the period from February to April 2025, the Office for National Statistics (ONS) said on Tuesday.
That represents a 0.1 percentage point increase compared to the previous period, and it marks the highest rate seen since summer 2021.
The number of staff on payroll, meanwhile, fell by 109,000 month-on-month in May, the largest drop seen since May 2020.
Annual pay growth excluding bonuses eased to 5.2% in the period from February to April, the slowest pace seen in seven months.
The number of available jobs fell by 63,000 to 736,000 between March and May, the 35th consecutive quarterly decline.
The data suggests the UK's labour market is cooling as firms are hesitant to hire, a trend attributed to rising employer costs.
In April of this year, businesses saw their payroll taxes (National Insurance) rise to 15% on salaries above £5,000, instead of 13.8% on salaries above £9,100.
The government also increased the minimum wage and the living wage, the latter received by workers over 21, in April.
'Indeed, with increased national insurance contributions on businesses now bedded in, the employment picture is deteriorating as companies look to scale back hiring, and in some cases cut their UK workforce significantly,' said Richard Carter, head of fixed interest research at Quilter Cheviot.
"This is all underpinning what is a difficult task for the Bank of England,' he added.
'With wage growth slowing but inflation rising, it will not want to pull the trigger on rate cuts too soon and put extra sails into the inflation charge. This perhaps explains Andrew Bailey's recent tone that rate cuts will be slow and cautious, as despite what is an obviously slowing economy, many risks remain present in the world.'
UK inflation for April was reported at 3.5%, although the ONS later pointed to a data error, noting that the figure should have been 3.4%
The Bank of England will meet next week for their monetary policy meeting.
'There's no doubt that US trade policies have contributed to business uncertainty and there will be companies who have put off investment whilst they figure out exactly what new trade deals might mean for them,' added Danni Hewson, AJ Bell head of financial analysis.
She added: 'Whilst the smart money is still on no cut at the Bank of England's meeting next week, the softening in the labour market and cooling wage increases have added to expectations that the MPC will deliver another cut later in the summer.'
Asian shares were marginally higher on Tuesday as investors kept an eye on US-China trade talks that might help stave off a recession.
Tokyo's Nikkei 225 gained 0.9% to 38,445.68, while the Kospi in South Korea jumped 0.3% to 2,865.12.
Hong Kong's Hang Seng edged 0.3% higher, to 24,261.26 and the Shanghai Composite index was up 0.1% at 3,403.52. In Taiwan, the Taiex surged 2.1% to 22.253,46.
Australia's S&P/ASX 200 advanced just less than 0.9% to 8.588,10.
On Monday, the S&P 500 edged up just 0.1% and at 6,005.88 is within 2.3% of its record set in February. The Dow Jones Industrial Average slipped by 1 point, which is well below 0.1%, to 42,761.76.
The Nasdaq composite added 0.3% to 19,591.24.
A second day of talks between the US and China was planned after the two global powers met in London for negotiations.
The hope is that they can eventually reach a deal to reduce painfully high tariffs against each other. Most of the tariff hikes imposed since US President Donald Trump escalated his trade war have been paused to allow trade in everything from tiny tech gadgets to enormous machinery.
Hopes that President Donald Trump will lower his tariffs after reaching trade deals with countries around the world have helped the S&P 500 win back gains after it dropped roughly 20% from its record two months ago. The index is back above where it was when Trump shocked financial markets in April with his wide-ranging tariff announcement on so-called 'Liberation Day'.
Some of the market's biggest moves came from the announcement of big buyout deals. Qualcomm rallied 4.1% after saying it agreed to buy Alphawave Semi in a deal valued at $2.4bn (€2.1bn). IonQ, meanwhile, rose 2.7% after the quantum computing and networking company said it agreed to purchase Oxford Ionics for nearly $1.08bn (€947.1mn).
On the losing side of Wall Street was Warner Bros. Discovery, which flipped from a big early gain to a loss of 3% after saying it would split into two companies. One will get Warner Bros. Television, HBO Max and other studio brands, while the other will hold onto CNN, TNT Sports and other entertainment, sports and news television brands around the world, along with some digital products.
Tesla recovered some of its sharp, recent drop. The electric vehicle company tumbled last week as Elon Musk's relationship with Trump broke apart, and it rose 4.6% on Monday after flipping between gains and losses earlier in the day.
The frayed relationship could end up damaging Musk's other companies that get contracts from the US government, such as SpaceX. Rocket Lab, a space company that could pick up business at SpaceX's expense, rose 2.5%.
In the bond market, the yield on the 10-year Treasury eased to 4.48% from 4.51% late Friday. It fell after a survey by the Federal Reserve Bank of New York found that consumers' expectations for coming inflation eased slightly in May.
Economists expect a report due on Wednesday to show that inflation across the country accelerated last month to 2.5% from 2.3%.
The Federal Reserve has been keeping its main interest rate steady as it waits to assess the inflationary effects of Trump's tariffs. A persistent increase in inflation expectations among US households could drive behaviour that creates a vicious cycle that only worsens inflation.
In other dealings early on Tuesday, US benchmark crude oil picked up 31 cents to $65.45 per barrel. Brent crude, the international standard, also gained 31 cents, to $67.35.
The dollar rose to 144.93 Japanese yen from 144.61 yen. The euro slipped to $1.1399 from $1.1421.