UK unemployment rate edges up as wage growth catches up with inflation
The rise in the unemployment rate was in line with market expectations.
According to figures by the Office for National Statistics, the unemployment rate for May to July 2023 increased by 0.5 percentage points on the quarter to 4.3%, up from 4.2% in the three months to June, while job vacancies fell to below a million.
At 7.8% during the period, annual growth in regular pay, excluding bonuses, matched the pace of inflation over the same period for the first time in nearly two years. «This means people's real pay is no longer falling,» the ONS said.
The figure remained the same as the previous three month period and is the highest regular annual growth rate since comparable records began in 2001.
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Annual growth in employees' average total pay, including bonuses, was 8.5%; which was boosted by the NHS and Civil Service one-off payments made in June and July.
Due to the strong momentum in wage growth, the Bank of England is expected to push ahead with a 25 basis point interest rate rise at its Monetary Policy Committee meeting later this month «to prevent pay hikes keeping inflation high», said Alice Haine, personal finance analyst at Bestinvest.
Nicholas Hyett, investment manager at Wealth Club, said signs the labour market is softening «is too little and too early to change the underlying narrative».
«Hawks [at the Bank of England] will argue that inflation remains an ingrained problem within the UK. Wage growth remains strong, rising ahead of wider inflation, and government forecasts suggest CPI will tick up again in August,» he said.
«We think that means the Bank of England will add a few more turns to the interest rate screw
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