UK Unemployment Rate Falls to 4.9% as Wages Grow More Than Expected

AI Summary

The UK's unemployment rate has fallen to 4.9% in the three months to April, while wages have grown more than expected, putting pressure on the Bank of England to raise interest rates. The Office for National Statistics reported that average wages excluding bonuses remained at 3.4%, but climbed to 4.4% once bonuses were included.

The Latest UK Unemployment Figures

The UK's unemployment rate has fallen to 4.9% in the three months to April, according to the Office for National Statistics (ONS). This is a decrease from 5% in the three months to March, and lower than economists had forecast.

Wage Growth Exceeds Expectations

Average wages excluding bonuses remained at 3.4%, but climbed to 4.4% once bonuses were included. Annual average regular earnings growth was 4.8% for the public sector, and 3% for the private sector.

The Impact on Monetary Policy

The strong wage growth has put pressure on the Bank of England to raise interest rates, despite a peace deal in the Middle East. The Bank of England governor, Andrew Bailey, has cited strong public sector pay as a concern for its monetary policy committee.

The Effect on Businesses and Hiring

Employers have become less likely to take on permanent full-time staff in response to the war in the Middle East, which has shaken business and consumer confidence. Recent surveys have shown that employers are turning their back on hiring permanent staff and making redundancies on a larger scale.

The Future Outlook

A fall in oil prices in recent days, linked to hopes for a peace deal between the US and Iran, could feed through into lower energy bills for businesses, easing cost pressures on them. However, the ONS figures also showed vacancies slumped to their lowest level in more than five years as firms continued to rein in their hiring.