Latest news with #Liz McKeown
The Independent
5 days ago
- Business
- The Independent
UK unemployment rises to highest in four years due to slowing wage growth
Britain's unemployment rate has reached its highest level since June 2021, while workers have also faced a significant slowdown in wage growth, official figures reveal. The Office for National Statistics (ONS) reported the UK jobless rate rose to 4.7% in the three months to May, an increase from 4.6% in the preceding three months to April. Concurrently, average earnings growth, excluding bonuses, decelerated to 5% in the period to May, marking its lowest level in almost three years. The figures point towards further pressure in the UK labour market, days after the governor of the Bank of England warned that the Bank is prepared to make larger interest rate cuts if it sees that the job market slowing. It also comes amid a backdrop of recent weakness in the economy, with UK GDP (gross domestic product) shrinking in both April and May. ONS director of economic statistics Liz McKeown said: 'The labour market continues to weaken, with the number of employees on payroll falling again, though revised tax data shows the decline in recent months is less pronounced than previously estimated. 'Pay growth fell again in both cash and real terms, but both measures remain relatively strong by historic standards. 'The number of job vacancies is still falling and has now been dropping continuously for three years.' The rise in unemployment is worse than economists had expected, having predicted that the jobless rate would remain at 4.6% for the month. Nevertheless, average wage growth was slightly higher than the 4.9% predicted by economists. But the rate of wage growth was still the weakest figure since the three months to June 2022 and represents a drop from a revised level of 5.3% in the three months to April. Wage growth continues to outstrip inflation, reflecting a rise of 1.8% after taking Consumer Prices Index inflation into account. Pressure in the labour market for the three months to May comes as firms swallowed significant increases in national insurance contributions and the national minimum wage in April. Firms have also been impacted by intensifying economic uncertainty after US President Donald Trump launched a new tariff regime in April, leading to heightened global trade tensions. The figures also showed job vacancies in the UK fell by 56,000 to 727,000 in the three months to June, compared with the previous quarter.
The Independent
5 days ago
- Business
- The Independent
UK unemployment jumps to highest since 2021 as wage growth slows
Britain's jobless rate has struck its highest level for four years as workers also faced another slowdown in wage growth, official figures have shown. The Office for National Statistics (ONS) said the rate of UK unemployment increased to 4.7% in the three months to May, from 4.6% in three months to April. It said this marked the highest level since June 2021. Meanwhile, average earnings growth, excluding bonuses, slowed to 5% in the period to May to its lowest level for almost three years. The figures point towards further pressure in the UK labour market, days after the governor of the Bank of England warned that the Bank is prepared to make larger interest rate cuts if it sees that the job market slowing. ONS director of economic statistics Liz McKeown said: 'The labour market continues to weaken, with the number of employees on payroll falling again, though revised tax data shows the decline in recent months is less pronounced than previously estimated. 'Pay growth fell again in both cash and real terms, but both measures remain relatively strong by historic standards.'
Yahoo
5 days ago
- Business
- Yahoo
Jobless rate hits four-year high- but makes interest rate cut more likely
The UK's unemployment rate has risen to a four-year high, in a surprise deterioration that boosts the case for a Bank of England interest rate cut. The Office for National Statistics (ONS) reported a rise in the jobless rate from 4.6% to 4.7% in the three months to May. No change had been expected after the 0.1 percentage point rise seen just last month. The ONS data, which still comes with a health warning due to poor participation rates, also showed a reduction in the pace of wage rises, with average weekly earnings rising by 5%. That was down from the 5.2% level reported a month ago. Money latest: ONS director of economic statistics, Liz McKeown, said of its findings: "The labour market continues to weaken, with the number of employees on payroll falling again, though revised tax data shows the decline in recent months is less pronounced than previously estimated. "Pay growth fell again in both cash and real terms, but both measures remain relatively strong by historic standards. "The number of job vacancies is still falling and has now been dropping continuously for three years." The data was released 24 hours after a surprise rise in the rate of , to 3.6%, was revealed by the ONS. It was seen as muddying the waters as the Bank considers the timing of its next interest rate cut. But a quarter point reduction, to 4%, is widely expected at the next meeting of the rate-setting committee in early August, The Bank, experts say, will be looking past the headline inflation numbers and see scope to introduce the third cut of the year due to the softening labour market seen in 2025 - a factor the Bank's governor Andrew Bailey had suggested would come more into focus in a recent interview with The Times. Weaker pay awards remain a compulsory element to bringing down borrowing costs as there are fears the UK's difficulties in bringing down inflation are partly linked to wage growth outpacing price hikes since August 2023. Add to that the slowdown in economic growth and you have a Bank seemingly grappling the effects of so-called stagflation - as scenario of weak growth with inflation persistently well above the Bank's 2% target. While there are conflicting forces at play for the Bank's interest rate deliberations, rising inflation, coupled with weakening growth and jobs data, are all unwelcome for a chancellor under growing pressure. Rachel Reeves was accused on Wednesday of contributing to inflation through taxes on employment deployed from April - with industry bodies in the grocery sector claiming an element of rising food price growth was down to businesses passing on those extra costs, alongside hikes to minimum pay requirements. At the same time, those budget measures have clearly held back hiring since the spring. One crumb of comfort for her is that the prospect of a rate cut next month remains on - with any reduction helping bring down the cost of servicing government debt as the headroom she has within the public finances remains under severe pressure. Government U-turns on winter fuel payment curbs and welfare reforms have squeezed her fiscal rules, leaving her to cover likely at the autumn budget to cover shortfalls either through further tax hikes or spending cuts. Yael Selfin, chief economist at KPMG UK, said of the rate cut prospects: "Slowing activity in the labour market, coupled with pay pressures easing, will likely prompt the Bank of England to lower interest rates next month. "The impact of April's tax and administrative changes has led to a marked slowdown in hiring activity among firms. With domestic activity remaining sluggish, the MPC will likely want to provide support via looser policy to prevent a more significant deterioration in the labour market."
