- Unemployment up from 4.3% to 4.4%, the highest since July 2021
- Wage growth excluding bonuses unchanged at 6.0%
- Economic inactivity jumps to 22.3%
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK jobs figures:
“The cracks that have been appearing in the UK labour market have widened over the last few months as businesses took stock of the cost of last year’s scorching prices and the wage increases they had to dole out.
“Wage growth had been slowing but the 10% increase in the National Living Wage has impacted that trajectory and is likely to throw enough shade on MPC members to require an abundance of caution when it comes to the next rate setting meeting. Looking at market expectation this morning the dial has moved slightly with just over 11% now believing a rate cut on 20 June is a possibility, especially after the ECB fired its starting pistol.
“With vacancy numbers continuing to fall and the claimant count rising it’s clear the economy is a little shaky and a nice adrenaline boost in the form of a rate cut would likely stimulate that growth all political players keep harking on about.
“But there are some fundamental problems that require a deft hand to deal with. Why is the UK economic inactivity rate so high and still climbing when the cost-of-living crisis has pushed so many households to breaking point, and how can any political party square the circle?
“Perhaps they could increase spend on public services like the NHS to cut waiting lists, which are keeping many workers on the bench without having their tax income to pay for it. There are promises aplenty in the manifestos that have been released so far and undoubtedly more to come as the different parties attempt to win us over.
“There is a lot more data for the Bank of England to mull over between now and its June meeting, but a rate cut before the election is a long shot even if the odds are looking better for a late summer change.”
