UK unemployment hits highest rate in five years to raise expectation of interest rates cut

Unemployment has risen to its highest level for 5 years and costs maturation has slowed again arsenic nan UK jobs marketplace continues to travel nether pressure, according to charismatic figures.

The Office for National Statistics (ONS) said nan complaint of unemployment lifted to 5.2% successful nan 3 months to December, up from 5.1% successful nan 3 months to November.

This was nan highest since nan 3 months to January 2021 and nan highest for complete a decade extracurricular of nan pandemic era.

Most economists had expected unemployment to stay astatine 5.1% successful nan latest 4th - but information from HMRC suggests further redundancies are already successful nan works, while firms responding to manufacture investigation often mention constricted hiring plans.

Sanjay Raja, main UK economist astatine Deutsche Bank, said “the information suggests location whitethorn beryllium a small much room to spell earlier we deed nan cyclical highest successful nan unemployment rate” and added that nan numbers would adhd anticipation to nan Bank of England cutting interest rates.

Next month’s unemployment information from nan ONS is owed retired connected 19 March - nan aforesaid day nan BoE’s Monetary Policy Committee are owed to ballot connected perchance lowering rates from 3.75 per cent. Further cardinal data, pinch regards to a imaginable cut, comes connected 18 February pinch nan latest ostentation figures.

The ONS added that regular costs maturation fell backmost erstwhile again, to 4.2% successful nan 3 months to December, against a downwardly-revised 4.4% successful nan 3 months to November, and was 0.8% higher aft taking Consumer Prices Index ostentation into account. Private assemblage salary is now increasing only successful statement pinch inflation.

But location was a invited summation successful vacancies, up by 2,000 quarter-on-quarter to 726,000 successful nan 3 months to January - though pinch nan rising unemployment rate, it intends location are now much progressive candidates per vacancy.

Liz McKeown, ONS head of economical statistics, said nan information showed “more group who were retired of activity are now actively looking for a job”.

She added: “The number of vacancies has remained broadly unchangeable since nan mediate of past year.

“Alongside rising unemployment this intends that nan number of unemployed group per vacancy has increased, reaching a caller post-pandemic high.

“Meanwhile, redundancies are besides showing an upward trend.”

All now whitethorn hinge connected tomorrow’s ostentation figures, says Thomas Pugh, main economist astatine taxation and consulting patient RSM UK.

“December’s rising unemployment rate, slowing backstage costs maturation and falling payroll numbers successful January each constituent towards a complaint trim successful March. A soft ostentation number connected Thursday is each it will return to seal nan deal.

“Overall, today’s information suggests nan labour marketplace was still anemic astatine nan extremity of past year. That powerfully supports a complaint trim arsenic soon arsenic adjacent period and astir apt 1 much successful nan summer. But nan Bank will still person to move cautiously amid sticky regular salary growth, particularly arsenic liking rates attack neutral.”

As for nan wider employment market, occupation tract Indeed’s elder economist Jack Kennedy says firms are still holding backmost connected hiring much people, particularly astatine nan inferior level.

“Employer be aware is wide crossed sectors. Businesses are fundamentally successful wait-and-see mode, reluctant to perpetrate to expanding their workforce until they person greater clarity connected nan economical outlook,” he said.

“What's peculiarly concerning is nan weakness astatine introduction level. Employers are navigating a difficult situation – higher payroll costs, vulnerable business assurance and persistent uncertainty astir maturation – and they're responding by pulling backmost connected inferior hiring. This makes it harder for younger workers to get that important first ft connected nan profession ladder, and we're seeing this reflected successful rising younker unemployment. This isn't conscionable a short-term problem; delayed profession starts tin person lasting effects connected net and progression.”