The Office for National Statistics (ONS) in the UK has reported that the labor market in England exhibited signs of deceleration during the three months spanning May to July. However, amidst these concerning trends, wages have remained robust. These developments could potentially prompt the Bank of England (BoE) to accelerate its plans for interest rate hikes at its upcoming meeting.
Notably, the unemployment rate in England increased to 4.3% for the May-July period, up from the 4.2% rate observed in the previous April-June period. This marks the highest unemployment rate recorded since the three-month period ending in September 2021. The current unemployment rate in the UK surpasses the BoE’s earlier forecast of 4.1%.
In addition to the concerning unemployment figures, data from the ONS also revealed that basic wages in England, excluding bonuses, experienced a 7.8% increase between May and July compared to the same period in the previous year. However, this growth remained unchanged from the expansion rate seen during April-June. These figures align with the expectations of economists, who anticipated a 7.8% increase.
While wage growth remains strong, the rising unemployment rate serves as a clear indicator that the labor market in England is facing a slowdown. This situation may prompt the BoE to reevaluate its monetary policy and consider an expedited timeline for raising interest rates to address the evolving economic landscape.