British Jobless Rate Stays Stable; Wage Growth Slows
The UK unemployment rate remained stable in the three months to January and wages grew slowly, raising the possibility of an interest rate pause from the Bank of England after ten successive rate hikes.
The unemployment rate remained unchanged at 3.7 percent in the three months to January, the Office for National Statistics reported Tuesday. The rate was forecast to rise slightly to 3.8 percent.
For the first time in more than a year, wage growth showed signs of slowing. Average earnings, excluding bonuses, increased 6.5 percent annually.
That was weaker than the 6.7 percent in the previous three months and economists’ forecast of 6.6 percent.
Average total pay including bonuses grew 5.7 percent from the same period last year. That was in line with expectations.
In February, the claimant count held steady at 3.8 percent. The jobless claims declined by 11,200 from the previous month.
ONS said there were 220,000 working days lost due to labor disputes in January. The figure eased sharply from 822,000 in December.
Further, data showed that payroll employment increased 98,000 on a monthly basis to 30.0 million in February.
The estimated number of vacancies fell 51,000 on the quarter to 1.124 million in the three months to February.
The number of job vacancies confirms that most firms are still trying to recruit staff, British Chambers of Commerce Head of Research David Bharier said.
“Finding appropriately skilled workers is one of the top issues for businesses, and many tell us that this prevents them from fulfilling orders or expanding,” Bharier added.
Fading of momentum in the UK wage numbers will be welcome news for the Bank of England, ING economist James Smith said.
Smith also said the uncertainty surrounding the US banking sector does question whether the BoE will hike by 25 basis points next week.
In February, the central bank had raised its benchmark rate by half a percentage point to 4.00 percent, the highest since 2008.
Earlier this month, BoE Governor Andrew Bailey said further increase in the interest rate might be required to achieve the UK inflation target on a sustainable basis.
However, many economists are of the view that the recent fallout from the collapse of the Silicon Valley Bank in the US may prompt policymakers to adopt a wait-and-watch stance for now.
HSBC Bank UK took over the UK unit of the SVB on Monday for a token amount of GBP 1 in a rescue deal. The Bank of England and the HM Treasury assured that depositors’ money were safe.
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