UK unemployment rose and wage growth slowed, according to the Office for National Statistics (ONS), in further signs of weakness in the jobs market ahead of the Bank of England‘s (BoE) latest interest rate decision.
The rate of UK unemployment rose to 5.1% in August to October – its highest level in nearly five years – which was in line with consensus expectations, but higher than the 5% seen in the previous three months.
Annual growth in average earnings, excluding bonuses, was 4.6% in August to October, which was down from 4.7% for the previous three months.
The estimated number of payrolled employees in the UK fell by 149,000 in the year to October and declined by 22,000 on the month.
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An early estimate for payrolled employees in November showed a 171,000 fall on the year and a 38,000 decline month-on-month.
The estimated number of vacancies in the UK was broadly unchanged in September to November, according to the ONS, showing a small decrease of 2,000.
Liz McKeown, director of economic statistics at the ONS, said: “The overall picture continues to be of a weakening labour market.
“The number of employees on payroll has fallen again, reflecting subdued hiring activity, while firms told us there were fewer jobs in the latest period.”
“This weakness is also reflected in an increase in the unemployment rate, while vacancies remained broadly flat,” she added.
The latest ONS data comes ahead of the BoE’s latest interest rate decision on Thursday, when the central bank is expected to cut rates by 25 basis points to 3.75%.
Ashley Webb, UK economist at Capital Economics, said that the BoE “will take comfort from the more significant continued slowdown in its preferred measure of regular private sector pay growth”.
“This lends some more support to our view that the Bank will deliver a present just in time for Christmas and cut interest rates from 4.00% to 3.75% on Thursday,” he said.
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Professor Joe Nellis, economic adviser at accountancy and advisory firm MHA, said: “October’s labour market data reveals clear signs of strain in the UK economy.
“The rise in unemployment marks a further shift in labour market dynamics. Redundancies are increasing, and vacancy numbers are continuing to fall as firms scale back hiring plans.
“This adjustment is consistent with an economy operating under tight monetary policy and persistent uncertainty around global demand and the future of workplace technology.”