UK Jobless Rate Remains Stable, Wage Growth Exceeds Expectations

The UK unemployment rate remained unchanged and wages grew more than expected in the fourth quarter, persuading the hawkish members of the Bank of England rate-setting committee to keep hiking the interest rate.

Data from the Office for National Statistics showed that the ILO unemployment rate was 3.7 percent in the three months to December, unchanged from the preceding period, and in line with expectations.

The ONS also said average earnings, excluding bonuses, climbed 6.7 percent annually in the three months to December. This was faster than the 6.5 percent increase forecast economists had forecast.

The 6.7 percent rise in the regular pay was the strongest growth rate seen outside of the coronavirus pandemic period.

Including bonuses, the total pay grew 5.9 percent in the three months to December, but slower than the expected 6.2 percent.

“With the BoE putting greater emphasis on the lagged impact of past tightening, and with inflation likely to show signs of improvement by spring, we suspect a March rate hike will be the last,” ING economist James Smith said.

Citing the stronger-than-expected wage growth, the Bank of England had raised its key rate last week by a half percentage points to 4.00 percent, the highest level since 2008.

The number of vacancies decreased by 76,000 on the quarter to 1.13 million in three months to January, ONS reported. This was the seventh consecutive quarterly fall since July 2022.

Jane Gratton, head of people policy at the British Chambers of Commerce, said the high level of vacancies suggests that firms are struggling to meet the orders on their books, and it puts any plans for growth far out of reach.

Recent surveys showed that uncertainties across industries and economic pressures continued to hold back recruitment.

Official data revealed that the nation lost 843,000 working days due to labor disputes in December, the highest since November 2011.

In January, the jobless claims fell unexpectedly by 12,900 from December. The claimant count held steady at 3.9 percent.

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