A Bank of England rate cut looks all but nailed on in December after the UK labour market showed further signs of strain in September, with the employment rate edging down to 75.0% from 75.1% in August.
Unemployment rose more sharply than anticipated, reaching 5.0% against market expectations of 4.9% and the previous month’s 4.8%. Economic inactivity remained stubbornly high at 21.0%.
Wage pressures continued to ease. Annual total earnings growth slowed to 4.8%, down from 5.0% in the previous three-month period and below the 4.9% forecast. The deceleration in pay growth will be closely watched by the Bank of England as it weighs future interest rate decisions.
“There will be no pre-budget comforts that can be taken from today’s employment data as the un-employment rate hits its highest level since May 2021. This self-inflicted wound rather than heeling continues to weep,” said Isaac Stell, Investment Manager at Wealth Club.
“Not only has the unemployment rate risen, but wage growth, albeit still rising ahead of inflation continues to shrink. There can be no doubt that the fiscal levers pulled by the Government and the Chancellor have significantly contributed to these figures and the responsibility lies at their feet.”