Thu, 08 Jun 2023

UK unemployment rate hits 48-year low

Robert Besser
21 May 2022, 02:31 GMT+10

LONDON, England: The UK's jobless rate fell to a 48-year low in the first three months of 2022, it was reported this week, as employers paid higher bonuses to keep or attract workers.

The Office for National Statistics has reported that core earnings for most workers fell by the greatest amount since 2013 when adjusted for inflation, but total pay, including bonuses, was up 7.0 percent from one year earlier, considerably more than economists' average forecast of 5.4 percent.

Further, the unemployment rate dropped to 3.7 from 3.8 percent, below predictions in a Reuters poll, and the number of unemployed people was less than the nation's job vacancies, for the first time on record.

"We were taken aback by the strength of today's labour market release, especially bearing in mind the fears of a downturn in the economy. Indeed, it will do nothing to quell the MPC's concerns over inflationary pressures," said Philip Shaw, an economist at Investec, as quoted by Reuters.

The Bank of England is concerned that a higher-than-normal pay rise rate could help entrench the current energy-driven leap in inflation.

In March, consumer price inflation was 7.0 percent, and official figures due this week are expected to show this figure reached 9.1 percent in April, when a 54 percent increase in energy tariffs took effect.

The bank also anticipates further price rises will push the economy close to recession by the end of 2022, increasing while unemployment, though some economists said this week's data indicated the bank has underestimated activities in the labour market.

"While the BoE's message was dovish at the last meeting, the data continue to speak louder than MPC rhetoric and we remain confident that rates will rise again by 25 basis points in June," said Allan Monks, economist at J.P. Morgan, as reported by Reuters.

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