The UK’s unemployment rate rose to its highest level in nearly a year, while wage growth remained strong, according to the Office for National Statistics (ONS). The jobless rate increased to 4.3% between January and March, up from 4.2%, with unemployment increasing. Meanwhile, pay, excluding bonuses, remained at 6%, above the expected figure of 5.9%, with wage growth continuing to outpace inflation. The number of job vacancies fell by 26,000 to 898,000 between February and April, with more people competing for jobs, though the figure is still higher than pre-pandemic levels.
Data also showed that the number of people considered “economically inactive” slipped slightly to 22.1% in Q1 2021. The ONS said the increase in economic inactivity was primarily driven by people being temporarily or long-term ill or retired. However, the figures were based on a smaller sample of household questionnaires than before the COVID-19 pandemic, so should be used with care.
Experts said the wage figures would be closely watched by the Bank of England when deciding whether to cut interest rates. While overall pay growth was unchanged between January and March, it slowed slightly to 5.9% for private employers, with wages growing by 2.4% when accounting for inflation. The Bank of England will review inflation and wage figures for April ahead of its June rate-setting meeting when deciding whether to cut rates. Rates have been held at 5.25% since August 2020, the highest level in 16 years.
Chancellor Jeremy Hunt said the wage rises would help alleviate family’s cost-of-living pressures, but Labour’s acting shadow work and pensions secretary, Alison McGovern, said the data showed things are worsening. She said the record numbers of long-term sickness on sick leave highlights the strain on the NHS. The ONS warned that its figures should be treated with a degree of caution as they are based on a smaller sample of questionnaires required before the pandemic
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