UK unemployment rate unexpectedly ticks higher
By Michele Maatouk
Date: Tuesday 16 May 2023
(Sharecast News) - The unemployment rate in the UK unexpectedly ticked higher in the three months to March, according to figures released on Tuesday by the Office for National Statistics.
The unemployment rate rose to 3.9% from 3.8% a month earlier, versus expectations for it to be unchanged. The increase was largely driven by people unemployed for over 12 months, the ONS said.
In February to April, the number of vacancies is estimated to have fallen by 55,000 on the quarter to 1.083m. The ONS noted that vacancies fell for the 10th consecutive period, reflecting "uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment".
The data also showed that growth in average total pay including bonuses was 5.8% and growth in regular pay excluding bonuses was 6.7% in January to March. Adjusted for inflation, however, growth in total and regular pay fell on the year, by 3% and 2%, respectively.
In addition, the economic inactivity rate fell by 0.4 percentage points on the quarter to 21%, driven by people aged 16 to 24. However, those inactive due long-term sickness increased to a record high.
Darren Morgan, director of economic statistics at the ONS, said: "Employment and unemployment both rose again in the first three months of 2023, driven in particular by men. This means the number of those neither working nor looking for work continues to fall, although the number of people not working due to long-term sickness rose again, to a new record.
"However, the number of people on employers' payrolls fell in April for the first time in over two years, though this is an early estimate that could be revised later.
"Despite continued growth in pay, people's average earnings are still being outstripped by rising prices.
"The number of days lost to strikes rose again in March, with education and health making up four-fifths of the total this month."
ING economist James Smith said today's report was the first big data test ahead of the June Bank of England meeting "and there's nothing here that screams a need for further hikes".
"Our base case is a pause next month, though by its own admission, the Bank of England is data-dependent now, and there's still another jobs report and two CPI releases before next month's meeting," he said.
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