UK unemployment rises to 4.3% as jobs market cools, but real wages are growing again – business live
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK unemployment has risen, as more people lost their jobs over the summer.
The latest labour market report, just released, shows that UK unemployment rose by 159,000 in the last quarter, taking the jobless total up to 1.464m.
The increase in unemployment was largely driven by people unemployed for up to 12 months.
That lifted the jobless rate to 4.3% in the May-July quarter, up from 4.2% a month ago, and 3.8% in the previous quarter.
Employment fell, due to a drop in full-time self-employed workers, pulling the employment rate down to 75.5% in May to July 2023, 0.5 percentage points lower than February to April 2023.
But there’s better news on pay this morning – total pay, including bonuses, rose by 8.5% per year in the May-July quarter, helped by one-off bonus payments to NHS and Civil Service workers this summer.
That could be significant for millions of pensioners, as this earnings figure is used to set the rise in the state pension the following April.
Regular pay (which excludes bonuses) grew by 7.8%, the same as last month – and the highest since comparable records began in 2001.
In May to July 2023, annual growth in regular pay (excluding bonuses) remained at 7.8%, its highest annual growth rate since comparable records began in 2001.
CPI inflation dropped to 6.8% in July, so this shows that wages are rising faster than prices again, after a long squeeze due to the surge in inflation last year.
Excellent news for households, but it might add to the pressure on the Bank of England to keep raising interest rates to fight inflationary pressures….
Photograph: ONS
Also coming up today
Today is the last day of trading at 24 Wilko stores across the UK, after the retail chain fell into administration.
Stores including those in Aldershot, Cardiff, Falmouth, Liverpool and Stafford are among those shutting today, with a further 28 closing on Thursday.
Yesterday, unions reported that all Wilko’s 400-plus stores are to close with the loss of more than 12,000 jobs, after talks with potential buyers failed to reach a rescue deal.
The number of vacancies across the UK fell by 64,000 in the last quarter, as demand for new workers cooled.
That lowered the number of vacancies in June to August 2023 to 989,000.
Vacancy numbers fell on the quarter for the 14th consecutive period in June to August 2023, and were lower in 13 of the 18 industry sectors, suggesting a fairly widespread retrenching by firms.
The number of vacancies in June to August 2023 was 989,000, down 64,000 on the previous 3 months.
They were down by 268,000 from a year ago, although they remained 188,000 above their pre #COVID19 levels.
Minister for Employment, GuyOppermanMP, says the government wants to remove barriers stopping people finding work:
“This Government’s record on employment is clear; there are one million fewer workless households than in 2010 and the number of people on company payrolls is a near record high. But we are not complacent about the challenges we face, which is why we remain focused on removing barriers to help people find and succeed in work.
“Our £3.5 billion package to deliver more tailored job support combined with our expanded childcare offer will help unlock individuals’ potential and grow the economy.”
Chancellor of the Exchequer, Jeremy Hunt has found the positives in today’s jobs report, saying:
“It’s heartening to see the number of employees on payroll is still close to record highs and that our unemployment rate remains below many of our international peers.
“Wage growth remains high, partly reflecting one-off payments to public sector workers, but for real wages to grow sustainably we must stick to our plan to halve inflation.”
The total number of people on company payrolls has dipped over the summer.
Today’s jobs report shows that payroll numbers fell by 1,000 in August, after a 3,500 drop in July.
Payroll numbers had hit record levels since the economy unlocked after the early waves of Covid-19, rising over 30 million, but this trend appears to have now fizzled out.
The number of employees on the payroll fell by 1,000 in August 2023.
However, it was up by 449,000 on the year and is now 1.12 million above its pre #COVID19 pandemic level.
The Institute of Directors are urging the Bank of England to stop raising interest rates, saying earlier increases have hurt the economy.
Kitty Ussher, Chief Economist at the IoD, says today’s jobs data shows a weakening labour market, so the Bank should keep interest rates on hold when it next meets on 21 September.
“Although wage inflation still feels high, the headline rate is now being driven by the recent public sector pay settlements which will not lead to cost pass-through on the part of their employers. Private sector pay wage pressure, although also high, has grown at a lower rate in recent months and is likely to fall further as the labour market loosens and the headline rate of inflation comes down.
“Our own data shows that the large interest rate rise in June led to a worsening in the way that business leaders considered the outlook for the economy. The Bank of England should now give its medicine time to work. The holy grail of a soft landing where we bring inflation down without causing a recession is still possible; the risk now is that too much tightening will unleash a series of negative events that causes the Bank to undershoot its inflation target further down the line.”
The financial markets, though, expect the Bank to raise interest rates again at this month’s meeting, from 5.25% to 5.5%.
Yesterday, Catherine Mann, one of the nine members of the Bank’s rate-setting monetary policy committee, argued it was better to raise interest rates too far rather than take the risk of allowing inflation to become embedded.
Pay rises for public sector workers rose at a record pace last summer, but still lagged behind the private sector.
Today’s labour market report shows that annual average regular pay growth for the public sector was 6.6% in May to July 2023 – the highest since comparable records began in 2001.
But pay across the private sector rose by 8.1%, which is “one of the largest annual growth rates seen outside of the coronavirus (COVID-19) pandemic period”, the ONS says.
Today’s figure, showing that average earnings grew by 8.5% in the year to May to July, is “particularly important”. It is very likely to be used in determining how much the state pension increases by next April for the UK’s 12 million pensioners.
So explains JonathanCribb, associate director at the Institute for Fiscal Studies.
‘Under the triple lock, the state pension increases every April in line with the highest of average earnings growth in the year from May to July of the previous year, CPI inflation in September of the previous year, and 2.5%. If today’s figure is indeed the highest of those three, it means that a full basic state pension is set to rise from its current £156.20 per week to £169.50, while a full new state pension – which those who reached state pension age since April 2016 can receive – would rise from £203.85 per week to £221.20.
‘Since its introduction in 2010, the triple lock, together with the introduction of the new state pension, has significantly increased the generosity of the state pension relative to earnings. But this comes at a cost to public finances – the triple lock has added £11 billion to spending on the state pension in 2023–24 relative to price or earnings indexation. Compared with the OBR’s forecast from just six months ago, today’s figures mean spending on the state pension is set to increase by another £2 billion in 2024–25.
‘These increasing public finance pressures caused by the triple lock, especially in periods of macroeconomic volatility as we have experienced in recent years, risk the sustainability of the state pension system, meaning heightened uncertainty for individuals planning their retirement finances.’
"Today's figures mean spending on the state pension is set to increase by another £2bn in 2024–25."@JCribbEcon responds to today’s average earnings growth figure, which is very likely to determine how much the state pension increases by next April.https://t.co/AjkS6Fsuzl
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK unemployment has risen, as more people lost their jobs over the summer.
The latest labour market report, just released, shows that UK unemployment rose by 159,000 in the last quarter, taking the jobless total up to 1.464m.
The increase in unemployment was largely driven by people unemployed for up to 12 months.
That lifted the jobless rate to 4.3% in the May-July quarter, up from 4.2% a month ago, and 3.8% in the previous quarter.
Employment fell, due to a drop in full-time self-employed workers, pulling the employment rate down to 75.5% in May to July 2023, 0.5 percentage points lower than February to April 2023.
But there’s better news on pay this morning – total pay, including bonuses, rose by 8.5% per year in the May-July quarter, helped by one-off bonus payments to NHS and Civil Service workers this summer.
That could be significant for millions of pensioners, as this earnings figure is used to set the rise in the state pension the following April.
Regular pay (which excludes bonuses) grew by 7.8%, the same as last month – and the highest since comparable records began in 2001.
In May to July 2023, annual growth in regular pay (excluding bonuses) remained at 7.8%, its highest annual growth rate since comparable records began in 2001.
CPI inflation dropped to 6.8% in July, so this shows that wages are rising faster than prices again, after a long squeeze due to the surge in inflation last year.
Excellent news for households, but it might add to the pressure on the Bank of England to keep raising interest rates to fight inflationary pressures….
Photograph: ONS
Also coming up today
Today is the last day of trading at 24 Wilko stores across the UK, after the retail chain fell into administration.
Stores including those in Aldershot, Cardiff, Falmouth, Liverpool and Stafford are among those shutting today, with a further 28 closing on Thursday.
Yesterday, unions reported that all Wilko’s 400-plus stores are to close with the loss of more than 12,000 jobs, after talks with potential buyers failed to reach a rescue deal.