The UK’s unemployment rate has remained unchanged over the last quarter compared to last month’s figures at 4.3%, according to the latest data released by the Office for National Statistics published today (17 December 2024).
Salaries excluding bonuses increased by 5.2% between August and October this year, while pay adjusted for inflation using the CPIH index rose by 2.2%.
The UK’s employment rate for those aged between 16 and 64 amounted to 74.9% over the same time period, which marked a small increase compared to last quarter but remains unchanged relative to the same time frame last year.
UK unemployment rate among those aged 16 years and over came in at approximately 4.3%, which is above estimates compared to a year ago and is an increase over the last quarter.
See also: UK economy contracts 0.1% in October
Lindsay James, investment strategist at Quilter Investors, said the data “reinforces the picture of a UK labour market holding steady”, with “little change in the unemployment rate and wage growth figures compared to last month”.
“The unemployment rate of 4.3%, alongside a reasonable uptick in annual growth in regular pay to 5.2%, reflects a labour market that is not yet budging under the strain of the economic headwinds it’s facing,” she explained.
“Recent data from recruitment firms, such as Reed, still points to weakening demand for labour, with job vacancies continuing their downward trend. Vacancies have dropped by 13% between October and November and are 26% lower than a year ago.
“While this is a concerning sign of softening economic activity, it has yet to translate into significant increases in unemployment, suggesting that the labour market’s adjustment is happening gradually rather than in a sharp downturn.”
Michael Brown, senior research strategist at Pepperstone, said the rise in both regular pay and overall salaries “are clearly incompatible with a sustainable return towards the 2% inflation target over the medium term”.
“The acceleration in earnings growth in October [was] caused principally by an unfavourable base effect from 2023, coupled with this summer’s above-inflation public sector pay deals feeding into the data, with this latter factor also likely to skew the November print to the upside,” he warned. “Policymakers will clearly be seeking a significant cooling in earnings pressures before being convinced that the risk of persistent price pressures is receding, and that sticky services inflation may begin to ease.”
Overall, however, he does not believe the report will be a “game-changer” for the Bank of England’s Monetary Policy Committee, who are due to make a decision on interest rates this coming Thursday (19 December 2024).
See also: ECB cuts interest rates to 3%
Quilter Investors’ James said: “With inflation currently at 2.3%, and still above the Bank’s 2% target, policymakers face the same dilemma: balancing the need to maintain price stability with the risk of leaving monetary policy too tight.
“Rates remain at 4.75%, with persistent wage inflation remaining above historical norms, which is likely to keep the Bank on alert.”
Brown agrees rates will likely remain at 4.75% later this week, adding: “Continued uncertainty over the precise impact of the measures announced in October’s Budget, coupled with stubbornly high inflation, and accelerating earnings growth, help to reinforce the MPC’s ‘gradual’ approach to removing policy restriction.
“As such, a 25bp cut in February, with quarterly cuts thereafter, remains my base case.”
