The UK’s unemployment rate has risen further, in a surprise deterioration that boosts the case for a Bank of England interest rate cut.
The Office for National Statistics (ONS) reported a rise in the jobless rate from 4.6% to 4.7% in the three months to May.
No change had been expected after the 0.1 percentage point rise seen just last month.
The ONS data, which still comes with a health warning due to poor participation rates, also showed a reduction in the pace of wage rises, with average weekly earnings rising by 5%. That was down from the 5.2% level reported a month ago.
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ONS director of economic statistics, Liz McKeown, said of its findings: “The labour market continues to weaken, with the number of employees on payroll falling again, though revised tax data shows the decline in recent months is less pronounced than previously estimated.
“Pay growth fell again in both cash and real terms, but both measures remain relatively strong by historic standards.
“The number of job vacancies is still falling and has now been dropping continuously for three years.”
The data was released 24 hours after a surprise rise in the rate of inflation, to 3.6%, was revealed by the ONS.
It was seen as muddying the waters as the Bank considers the timing of its next interest rate cut.
But a quarter point reduction, to 4%, is widely expected at the next meeting of the rate-setting committee in early August,
The Bank, experts say, will be looking past the headline inflation numbers and see scope to introduce the third cut of the year due to the softening labour market seen in 2025 – a factor the Bank’s governor Andrew Bailey had suggested would come more into focus in a recent interview with The Times.
