Britain’s unemployment rate has risen to its highest level for nearly a year as further cracks show in the jobs market, according to official figures.
The Office for National Statistics (ONS) said the rate of UK unemployment rose to 4.3 per cent in the three months to March, which is the highest since May to July last year and up from 4.2 per cent in the previous three months.
The figures also showed regular average earnings growth remaining unchanged at 6 per cent in the three months to March.
Chancellor Jeremy Hunt said: “This is the 10th month in a row that wages have risen faster than inflation, which will help with the cost-of-living pressures on families.
“While we are dealing with some challenges in our labour supply, including pandemic impacts, as our reforms on childcare, pensions tax reform and welfare come online I am confident we will start to increase the number of people in work.”
The figures also showed regular average earnings growth remaining unchanged at 6 per cent in the three months to March.
While this helped wages outstrip Consumer Prices Index (CPI) inflation by 2.4% – the highest since the three months to August 2021 – it is unhelpful for the Bank of England in its battle to rein in inflation.
The Bank is watching wages closely as it looks to bring CPI back to its 2 per cent target, and cooling earnings growth is seen as being key to paving the way for it to begin cutting interest rates.
Most economists were expecting earnings growth to fall to 5.9 per cent.
Liz McKeown, ONS director of economic statistics, said: “We continue to see tentative signs that the jobs market is cooling, with both employment from our household survey and the number of workers on payroll showing falls in the latest periods.
“At the same time the steady decline in the number of job vacancies has continued for a 22nd consecutive month, although numbers remain above pre-pandemic levels.”
“Earnings growth in cash terms remains high, with the recent falls in the rate now levelling off while, with inflation falling, real pay growth remains at its highest level in well over two years,” she added.
Ashley Webb, UK economist at Capital Economics, said: “While the further easing in regular private sector pay in March suggests that wage pressures faded a bit faster than the Bank of England expected, broader measures of wage growth are probably still a bit too strong for the Bank’s liking.
“At the margin, this may make the Bank a bit more uneasy about first cutting interest rates in June.
“The 178,000 fall in employment in the three months to March (consensus & CE -220,000) was a bit smaller than most expected. Even so, the unemployment rate rose from 4.2% to 4.3% (consensus 4.3%, CE 4.2%), which left it in line with the Bank’s forecast.
“And after a brief hiatus in the three months to March, the number of job vacancies resumed their downward trend in the three months to April. Vacancies fell from 913,000 to 898,000. Admittedly, that still leaves job vacancies 10% above the pre-pandemic level, but they remain 31% below the peak in May 2022.”
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