Home » UK unemployment rate rises to 4.4% as labour market cools, but wage growth sticky – business live

UK unemployment rate rises to 4.4% as labour market cools, but wage growth sticky – business live

Introduction: Unemployment rate rises to 4.4%

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Back when the UK general election was called, today was identified as a key date to take the health of the economy.

That’s because the latest labour market data is being released, the first of five pieces of important economic news which will test Rishi Sunak’s claim that his economic plan was working.

The data will also be watched at the Bank of England, as well as across Westminster, as central bankers look for evidence that inflationary pressures are esing.

And the big news is that unemployment has risen, while wage growth remains stickily high – which may dampen hopes of an early interest rate cut.

The Office for National Statistics has reported that the number of people unemployed rose by 138,000 in the February-April quarter, taking the total to just over 1.5 million.

This lifts the UK unemployment rate to 4.4%, the highest since July-September 2021.

The number of people in work has fallen, by 139,000, to 32.97 million.

And 132,000 more people fell out of the labour market altogether, partly due to ill health, taking the total of economically inactive up to 9.434m. That left the economic inactivity rate at 22.3% for the three months to April, up from 22% in the previous quarter.

The data also shows that companies are cutting back on hiring, with the number of vacancies in March to May 2024 falling by 12,000 to 904,000.

The number of vacancies in March to May 2024 was 904,000, a decrease of 12,000 on the previous 3 months.

This is down by 156,000 from a year before, although they remained 108,000 above their pre #COVID19 levels.

Read Vacancies and jobs in the UK ➡️ https://t.co/OOuA5MDtdJ pic.twitter.com/RzohaWofTp

— Office for National Statistics (ONS) (@ONS) June 11, 2024

The ONS says:

This month’s figures continue to show signs that the labour market may be cooling, with the number of vacancies still falling and unemployment rising, though earnings growth remains relatively strong.

We’ve published the latest UK labour market figures.

Headline indicators for the UK labour market for February to April 2024 show:

• employment was 74.3%
• unemployment was 4.4%
• economic inactivity was 22.3%

Read Labour market overview ➡️ https://t.co/d5svuWoytL pic.twitter.com/hsLB0qWhCg

— Office for National Statistics (ONS) (@ONS) June 11, 2024

But wage growth did not slow, despite this cooling demand for workers.

The ONS reports that annual growth in regular earnings (excluding bonuses) was 6.0%, the same as for the previous three-month period; and annual growth in employees’ average total earnings (including bonuses) was 5.9%, the same as for the previous three-month period.

The agenda

  • 7am BST: UK labour market statistics

  • 11am BST: NFIB index of US small business optimism

  • Noon BST: Fireside chat with ECB chief economist Philip Lane at the Banking and Payments Federation Ireland National Conference in Dublin

  • 2pm BST: Russia trade balance for April

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Key events

Full story: UK unemployment rises by 138,000 as labour market weakens

Larry Elliott

There are signs in today’s UK labour market report that wage growth has slowed, despite looking sticky.

Our economics editor Larry Elliott explains:

Annual growth in average earnings in the three months to April was 5.9% for all workers – unchanged on the three months to March – while for the private sector the growth rate eased from 6.1% to 5.8%.

In April alone, earnings overall were 5.5% up on the same month in 2023 compared with 6.4% in the year to March. For the private sector, the annual increase was 5% in April, down from 6.8% in the year to March.

Pay in real terms is rising because wages are rising faster than the annual inflation rate, which stood at 2.3% in April.

Here’s the full story:

Resolution: Cooling labour market means next government must tackle falling employment

The next government will have to tackle the problem of falling employment, rather than falling inflation, says the Resolution Foundation thinktank.

Resolution point out that the UK unemployment rate has increased for four months in a row – from 3.8% in the last quarter of 2023, to 4.4% in the three months to April 2024 – an increase of 190,000 people out of work.

Vacancies have fallen for 23 out of the past 24 months, they add, while the number of employees in the PAYE data has fallen for three out of the past four months, after rising for 35 months in a row.

And average earnings remain more than £14,000 a year off their pre-financial crisis path after 16 years of wage stagnation.

Cooling labour market means next government will have to tackle the problem of falling employment, not falling inflation – @nyecominetti responds to the latest @ONS labour market statistics. Full thread with all the key takeaways coming shortly…. https://t.co/HuWSijbPeR

— Resolution Foundation (@resfoundation) June 11, 2024

Nye Cominetti, principal economist at the Resolution Foundation, explains:

“The labour market has continued to cool in early 2024, with both unemployment and inactivity up. Worryingly, the UK employment is closer to its mid-pandemic lows, than its pre-pandemic highs.

“Turning around this poor performance, and kickstarting the kind of jobs growth Britain experienced in the 2010s will be a key task for the next government.

“But while the jobs market weakens, pay packets remain resilient. This recent spurt of real wage growth, the strongest in an almost a decade, will be a relief to workers and a worry for the Bank of England. But it can’t be sustained unless productivity picks up.”

Next government must ‘widen employment support to all’

The fall in UK employment in the last quarter, and the rise in inactivity, shows that the labour market isn’t working for millions of people, explains Stephen Evans, chief executive of the Learning and Work Institute.

Evans explains:

“The last labour market stats before the election show a further drop in employment and rise in economic inactivity. 3.2 million people are out of work but want a job: the next government needs to widen employment support to all who want to work, given today only 1 in 10 out-of-work disabled people get help to find work each year.

Average earnings are rising in real terms as inflation falls, but are a staggering £12,000 per year below what they’d be on pre-financial crisis trends. This shows the scale of catch-up needed in the years ahead.”

Last pre-election labour market stats. Employment falling & economic inactivity rising. Product of weak economy & policy that doesn’t reach enough of the 3.2m people out of work who want a job. Only 1 in 10 out of work disabled people get help to find work each year. pic.twitter.com/SM4WTZ2wMI

— Stephen Evans (@Stephen_EvansUK) June 11, 2024

Worth saying the only real way to reduce the benefits bill without further increasing hardship is to invest in a long-term plan to help people back to work & improve wages & good work.

— Stephen Evans (@Stephen_EvansUK) June 11, 2024

Employment rate recovery has not just stalled, it’s going backwards. Look at the red line. Another few months & recovery could be weaker than the 90s recession, even though the initial employment dip in the pandemic was smaller. Caveat about LFS data challenges of course. pic.twitter.com/UsGjPyrXz8

— Stephen Evans (@Stephen_EvansUK) June 11, 2024

We’re going backwards compared to other countries too: from 2nd in the G7 pre-pandemic to 4th now. Over 3m people are out of work but want a job, but too few get help to find work each year. That must change as part of a plan for inclusive growth. pic.twitter.com/DrI7eKiT59

— Stephen Evans (@Stephen_EvansUK) June 11, 2024

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TUC: The Conservatives have failed working people

TUC General Secretary Paul Nowak says:

“These damning figures show the Conservatives have taken the jobs market from bad to worse.

“Unemployment is rising. Vacancies are falling. Insecure work is at epidemic levels. Record numbers are long-term sick. And wages are still worth less than in 2008.

“The Tories have failed working people. We need a government that will rebuild industry, create wage growth, and deliver a better living for working families.”

UK workforce is ‘poorer and sicker’ than in 2019

Today’s labour market data shows there will be no time for complacency for the next Government as the UK has a smaller workforce that is poorer and sicker than in 2019.

That’s the verdict of Rebecca Florisson, principal analyst at the Work Foundation at Lancaster University.

Florisson explains that living standards have not recovered despite strong wage growth:

“Annual nominal wage growth was 6%, with the record National Living Wage increase of 9.8% improving the pay of 3.3 million low paid workers. There are signs that the wage growth recovery has peaked.

“Despite real wages rising by 2.3% on the year, the economic impact of the Covid-19 pandemic and the war in the Ukraine has made this the first Parliament since 1955 where living standards have declined. The reality is that most people are feeling poorer than when they last voted in the last General Election nearly five years ago.

The UK also has a smaller workforce than at the start of the Parliament, Florisson adds:

“There are now a record 2.83 million people who are economically inactive due to long-term sickness – 702,000 higher than in January-March 2020. The UK continues to be an international outlier with participation rates well below pre-Covid levels and this trend shows no sign of abating.

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Pay is rising fastest in the City, and slowest on UK building sites.

The ONS explains:

In February to April 2024, the finance and business services sector saw the largest annual total pay growth at 6.9%. The construction sector saw the smallest annual total pay growth across sectors, at 2.1%.

Liz Kendall: Rising unemployment due to Tory ‘abject failure’

The rise in unemployment, and in people neither working nor looking for work (economically inactive) is a sign of 14 years of “abject failure” by the government, says Liz Kendall, Labour’s shadow work and pensions secretary:

“Today’s figures confirm that the Tories have no hiding place after 14 years of abject failure.

On Rishi Sunak’s watch, a record number of people are out of work due to long-term sickness at terrible cost to them, to business and the taxpayer, and we remain the only G7 country whose employment rate still isn’t back to pre-pandemic levels.

Labour’s plan will get Britain working by cutting NHS waiting lists, introducing a new national jobs and careers service, making work pay and supporting people into good jobs across every part of the country.

It’s time to stop the chaos, turn the page and start rebuilding Britain.”

Minimum wage increases pushed up warnings.

The increase in the UK minimum wage helped to keep wage growth strong in the last quarter.

The national living wage rose by almost 10% at the start of April, to £11.44 an hour, lifting take-home pay for around three million workers.

Yael Selfin, chief economist at KPMG UK, says:

“Wage growth remained elevated in April as the 10% hike in the National Living Wage was enough to temporarily arrest the downward momentum in pay.

Based on today’s release, we estimate that the rise in the National Living Wage boosted the overall level of pay by around 0.1%, although the current headline rate somewhat underestimates the impact because it is reported as a three-month average.

“The unemployment rate ticked up to 4.4%. The recent weakening in demand for staff has been attributed to a lack of roles and firms delaying hiring decisions. This is consistent with a broader trend of retaining existing labour, and could signal that firms expect a pickup in activity so that they could utilise their existing staff more.

Thomas Pugh, economist at audit, tax and consulting firm RSM UK, agrees that the minimum wage increase kept regular pay high:

“The punchy 0.6% m/m increase in private sector regular pay in April was enough to keep headline total pay growth at 5.9%. However, we estimate at least half of this monthly increase was due to the one-off 9.7% increase in the national minimum wage.

Indeed, the labour market continues to loosen with employment dropping by another 139,000 in the three months to April and the unemployment rate rising to 4.4%

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Wages are rising slightly faster in the UK public sector than in the private sector, today’s labour market report shows.

The Office for National Statistics reports that annual average regular earnings growth for the public sector “remains strong”, at 6.4% in February to April 2024.

For the private sector, total regular (ex-bonuses) pay rose by 5.8%, the slowest rate since April to June 2022 (when it was 5.4%).

Annual average total earnings growth for the public sector was 6.3% and was 5.8% for the private sector, the ONS adds.

UK real wages rising at fastest since 2021

The good news for workers is that real wages (ie, after inflation) rose at their fastest rate in almost three years.

Adjusted for CPI inflation, total pay (including bonuses) grew by 2.7% per year in February to April 2024, which is the fastest rate since July to September 2021 (when it was 3.0%).

Regular pay (which excludes bonuses) rose by 2.9%, the fastest growth since June to August 2021 (when it was 3.4%).

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Introduction: Unemployment rate rises to 4.4%

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Back when the UK general election was called, today was identified as a key date to take the health of the economy.

That’s because the latest labour market data is being released, the first of five pieces of important economic news which will test Rishi Sunak’s claim that his economic plan was working.

The data will also be watched at the Bank of England, as well as across Westminster, as central bankers look for evidence that inflationary pressures are esing.

And the big news is that unemployment has risen, while wage growth remains stickily high – which may dampen hopes of an early interest rate cut.

The Office for National Statistics has reported that the number of people unemployed rose by 138,000 in the February-April quarter, taking the total to just over 1.5 million.

This lifts the UK unemployment rate to 4.4%, the highest since July-September 2021.

The number of people in work has fallen, by 139,000, to 32.97 million.

And 132,000 more people fell out of the labour market altogether, partly due to ill health, taking the total of economically inactive up to 9.434m. That left the economic inactivity rate at 22.3% for the three months to April, up from 22% in the previous quarter.

The data also shows that companies are cutting back on hiring, with the number of vacancies in March to May 2024 falling by 12,000 to 904,000.

The number of vacancies in March to May 2024 was 904,000, a decrease of 12,000 on the previous 3 months.

This is down by 156,000 from a year before, although they remained 108,000 above their pre #COVID19 levels.

Read Vacancies and jobs in the UK ➡️ https://t.co/OOuA5MDtdJ pic.twitter.com/RzohaWofTp

— Office for National Statistics (ONS) (@ONS) June 11, 2024

The ONS says:

This month’s figures continue to show signs that the labour market may be cooling, with the number of vacancies still falling and unemployment rising, though earnings growth remains relatively strong.

We’ve published the latest UK labour market figures.

Headline indicators for the UK labour market for February to April 2024 show:

• employment was 74.3%
• unemployment was 4.4%
• economic inactivity was 22.3%

Read Labour market overview ➡️ https://t.co/d5svuWoytL pic.twitter.com/hsLB0qWhCg

— Office for National Statistics (ONS) (@ONS) June 11, 2024

But wage growth did not slow, despite this cooling demand for workers.

The ONS reports that annual growth in regular earnings (excluding bonuses) was 6.0%, the same as for the previous three-month period; and annual growth in employees’ average total earnings (including bonuses) was 5.9%, the same as for the previous three-month period.

The agenda

  • 7am BST: UK labour market statistics

  • 11am BST: NFIB index of US small business optimism

  • Noon BST: Fireside chat with ECB chief economist Philip Lane at the Banking and Payments Federation Ireland National Conference in Dublin

  • 2pm BST: Russia trade balance for April

Share

Updated at