The UK unemployment rate rose more than expected in the third quarter and wage growth softened, adding pressure on the Bank of England to cut interest rates further.
The unemployment rate rose to 4.3 percent in the September quarter from 4.0 percent in three months to August period, the Office for National Statistics reported Tuesday. The rate was seen at 4.1 percent.
Average earnings including bonus grew 4.3 percent annually. The ONS said the annual increase was affected by the civil service one-off payments made in July and August 2023. Economists had expected an increase of 3.9 percent.
Job vacancies decreased for the 28th consecutive period in three months to October, the ONS said. The number of vacancies declined 35,000 on the quarter to 831,000.
Data showed that payrolled employees decreased 5,000 in October from a month ago but increased 95,000 from the previous year, to 30.4 million.
Claimant count rose by 26,700 in October after rising 10,100 in September. However, this was smaller than economists’ forecast of 30,500.
There were an estimated 48,000 working days lost because of labor disputes in September.
The BoE will stay cautious and keep rates on hold in December, before cutting again in February, ING economist James Smith said. Assuming the data looks a little better by then, the rate cuts will accelerate thereafter, he added.
Last week, the BoE had lowered its interest rate by a quarter-point to 4.75 percent. Previously, the U.K. central bank had reduced the policy rate by a quarter-point in August, which was the first reduction since March 2020.
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