LONDON, April 18, 2010 (FBC) Britain’s unemployment rate rose unexpectedly in three months in February, but wage growth was higher than expected, raising concerns for the Bank of England (BOE) as it weighs whether to raise interest rates further. It highlights.
The Office for National Statistics said in a Reuters poll of economists that the unemployment rate had risen to 3.8% – the highest since the second quarter of 2022 – instead of holding at 3.7%.
Annual wage growth for the three months to January improved to 5.9% and was held at that level for the three months to February – above the 5.1% forecast in a Reuters poll. Salary growth excluding bonuses was held at 6.6%.
“Pays continue to grow more slowly than prices, so incomes are still falling in real terms, although the gap between public and private sector income growth is narrowing,” said ONS statistician Darren Morgan.
Britain’s consumer price inflation hit a more than 40-year high of 11.1% in October, and was still in double digits in February.
The BoE has forecast inflation to fall below 4% by the end of the year, as wholesale energy prices ease, but financial markets see an 80% chance of raising borrowing costs for the 12th meeting in a row next month, from 4.5% to 4.25%.
Wage pressures are a key concern for the central bank, and while unexpectedly fast wage growth is a concern, some signs in Tuesday’s data that inflation in the labor market is easing may be comforting.
Britain’s unemployment rate fell by 0.4% to 21.1% from the previous quarter – the lowest in the three months to May 2022 – while the number of job vacancies fell by 47,000 to 1.105 million, the lowest in the three months to August 2021. Although that’s up from 304,000 before the pandemic.
“Despite growing optimism that the UK economy will avoid recession this year, we continue to see the labor market climb out of the doldrums,” said Jack Kennedy, chief economist at the jobs website.
As well as the low vacancies in the ONS data, the data actually showed that businesses were now less willing to give staff a signing-on bonus than at the end of last year, he added.
Reporting by Sachin Ravikumar, Editing by Kylie MacLellan
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