UK Unemployment Rises to 4.5% as Labour Market Continues to Loosen

Strategic Insights -

The UK unemployment rate rose to 4.5% in March, the highest since the summer of 2021, according to the Office for National Statistics. The increase in unemployment comes amidst a gradual decline in job vacancies, with numbers falling to 783,000 in the three months to March, the lowest since April 2021. Average weekly pay growth slowed to 5.6% in the three-month period, down from 5.7% in February, but still above the 2.6% CPI inflation rate. Employee numbers fell by 33,000 month-to-month in April, down from a revised 47,000 fall in March.

Key Takeaways:

  • The UK unemployment rate rose to 4.5% in March, the highest since the summer of 2021.
  • Job vacancies continued to fall, with numbers down to 783,000 in the three months to March, the lowest since April 2021.
  • Average weekly pay growth slowed to 5.6% in the three-month period, down from 5.7% in February, but still above the 2.6% CPI inflation rate.
  • The decline in job vacancies and slowing pay growth may justify further interest rate cuts from the Bank of England's monetary policy committee.
  • The labour market continues to loosen, with employee numbers falling by 33,000 month-to-month in April.
  • The relaxation of labour market conditions may lead to a change in this year's pay deals, which are likely to be different from those given over the past couple of years.
  • Economists such as Rob Wood at Pantheon Macroeconomics argue that the labour market's gradual easing justifies further interest rate cuts.

Statistics:

  • Unemployment rate: 4.5% in March, up from 4.4% in February and the highest since the summer of 2021.
  • Job vacancies: 783,000 in the three months to March, down from 801,000 in February and the lowest since April 2021.
  • Average weekly pay growth: 5.6% in the three-month period, down from 5.7% in February.
  • CPI inflation rate: 2.6%.
  • Employee numbers: fell by 33,000 month-to-month in April, down from a revised 47,000 fall in March.

Sources:

  • Office for National Statistics (ONS)
  • AJ Bell
  • Pantheon Macroeconomics
  • HMRC
  • BBC News (online) article reference missing
  • The Guardian, Rachel Reeves