British unemployment at its highest level in more than two years

The unemployment rate has unexpectedly risen to the highest level in two and a half years, official figures show.

Interest rates rose to 4.4% in the three months to April, the highest level since September 2021.

Despite the increase, wage growth remained strong, with profits continuing to rise faster than prices.

There was a further increase in inactivity, bringing it to the highest level in almost a decade. with more than a fifth of working-age people considered not to be actively looking for work.

“This month’s figures continue to show signs that the labor market may be cooling, with job vacancies still falling and unemployment rising, although earnings growth remains relatively strong,” the Office for National Statistics (ONS) said.

Regular earnings – excluding bonuses – rose 6% year on year, the ONS said, unchanged from the previous month.

However, when the impact of inflation is removed, wages rose 2.9% year-on-year, the highest level since August 2021.

Economists had expected a rise in wages due to the increase in the National Living Wage in April. For people aged 21 and over it rose to £11.44 per hour, an increase of 9.8% on last year.

Although the ONS has urged caution on unemployment figures because the study population is small, these are supported by the more recent employer payroll figures, which show that the number of employees fell by 36,000 between March and April and in 2013 continue to decline. Be able to.

The number of vacancies also fell by 9,000 to 904,000.

The ONS figures showed that 22.3% of working-age adults in Britain are considered not to be actively looking for work, equating to over nine million people.

Concerns have been raised about labor shortages hitting the UK economy, and the inactivity rate among adults has remained at persistently high levels in recent years since first soaring during the pandemic.

The figure is now at its highest level since 2015, with the increase in long-term absenteeism a key factor. Since 2022, it has become the main reason why working-age people are economically inactive.

The latest data will be studied by the Bank of England to help decide the timing of the first rate cut since the start of the pandemic.

The Bank will meet next week to discuss interest rates, but KPMG’s chief economist Yael Selfin said the “mixed” data was “unlikely to change the Bank of England’s direction”, predicting rates would remain unchanged this month.

She said weaker demand for staff was attributed “to a lack of roles and companies delaying hiring decisions”.

Abrdn’s deputy chief economist Luke Bartholomew said: “UK wage growth remains very strong, but with further evidence that the labor market is cooling, this report is unlikely to significantly change the thinking at the Bank of England.

“We expect the first rate cut in August, but that is conditional on further progress in reducing underlying inflationary pressures in the coming months,” he added.

Work and Pensions Secretary Mel Stride told the BBC that the unemployment rate had only risen “slightly” and was “still at historic, relatively low levels”.

“Our employment record is extremely strong,” he added.

Labor shadow work and pensions secretary Liz Kendall said: “Today’s figures confirm that the Tories are out of hiding after fourteen years of abject failure.”

Liberal Democrat Treasury spokesperson Sarah Olney said: “This Conservative carousel of chaos is putting our economy on a rollercoaster and the British people are fed up with it.”

SNP economy spokesman Drew Hendry said: “These latest figures show the Tories have devastated the economy with years of austerity, Brexit and a cost of living crisis – and have no plan to fix it.”

A Green Party spokesperson said rising unemployment “has been combined with deteriorating public services […] is a fitting but tragic testament to a government out of touch and out of time.”

A spokesperson for Plaid Cymru noted that Wales had the highest economic inactivity rate and the lowest employment rate, describing it as “a damning indictment of both the Conservatives in Westminster and Labor in Wales”.

The BBC has also approached Reform UK for comment.