Monday, September 25, 2023
HomeEconomyUK unemployment falls to lowest since 1974, but jobs boom is fading

UK unemployment falls to lowest since 1974, but jobs boom is fading

William Schomberg and David Milliken

LONDON (Reuters) – Unemployment in UK hits lowest point since 1974 , but the decline was largely due to a decline in the size of the workforce, and there were other signs that the country’s employment boom was fading, exacerbating the Bank of England’s inflation problems.

The unemployment rate fell to 3.6 percent in the three months to July, the NBS said. Economists polled by Reuters had expected it to remain at 3.8%.

However, the decline is not a sign of the health of the UK economy, which is at risk of recession.

Employment growth 40, 000, less than a third of the growth forecast in a Reuters poll.

“We are now starting to see signs that the labour market is losing momentum,” said Jack Kennedy, UK economist at Global Indeed.

Economic inactivity rate – a measure of the proportion of the population not working and not looking for work – in the quarter to 21.7%, the highest level in the three months to January 1989.

The ONS said the increase was due to more people being classified as chronically ill and fewer full-time students entering employment than normal during the year.

Meanwhile, pay growth beat expectations, reflecting a shortage of jobseekers, but still lags far behind inflation expected to hit 10.2% for the month 000 through August, when data is released on Wednesday Time.

The Bank of England is concerned that a tight labor market will exacerbate the recent spike in price pressures.

The Bank of England raised rates by the most since last month. It is expected to increase again in September. 22.

Sterling jumps after Tuesday’s data, with investors pricing in a three-quarter percentage point chance of a BoE rate hike next week 83% , which will be the largest since 1989, not included in 1974 in an attempt to prop up the pound, but it was quickly reversed.

Price pressure

There were other signs of price pressure in the labor market in the ONS data released on Tuesday.

Wages excluding bonuses rose 5.2%, the highest level since the three months to August 2021. A Reuters poll showed a 5.0 percent increase. Including bonuses, wages rose 5.5%.

UK labour market beats expectations for soaring unemployment amid coronavirus crisis, helped by 82 billion Pound Sterling ($82 Billion US Dollars) Government Employment Protection Scheme.

But recent signs

coupled with weaker-than-expected job growth, saw the biggest drop in the number of job vacancies between June and August after two years of decline , , although it remains at an all-time high of 1.266 million.

ING economist James Smith said soaring energy prices could force companies to make larger layoffs.

“We expect the impact on the job market to be more pronounced in the coming months, but the government’s newly announced commitments will also limit business energy bills as households should help avoid a winter when unemployment is rising sharply,” Smith said.

New Prime Minister Liz Truss last week announced a cap on soaring energy prices.

( $1=0.8532 pound)



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