British unemployment rate increased more than predicted in February, raising concerns that firms are beginning to lay off workers in reaction to high interest rates.
According to the Economic Times, the Office for National Statistics reported that the jobless rate jumped to 4.2 percent in February from 3.9 percent, much exceeding the 4% forecast by City analysts.
“We are now seeing tentative signs that the jobs market is beginning to cool,” Liz McKeown, ONS Director of Economic Statistics, stated. The ONS also reported that average regular pay increase, excluding incentives, fell to 6.0 percent from 6.1 percent. However, after accounting for Britain’s yearly inflation rate over the period, real earnings increased by only 2.1 percent.
“Easing labour market pressure keeps the Bank of England on track for a summer rate cut,” said Yael Selfin, chief economist at KPMG UK. “The minor slowdown in regular pay growth will provide some relief to the BoE, which has relied on pay statistics as a crucial indicator of domestic inflationary pressure.
“Moreover, the rise in unemployment rate paints a picture of a less tight labour market.”
Unemployment Rate
In March, the Bank of England maintained its benchmark interest rate at a 16-year high of 5.25 percent, as total UK inflation remained persistently above the 2.0 percent target. According to the Economic Times, inflation dropped to a nearly two-and-a-half-year low of 3.4 percent in February, alleviating the country’s cost-of-living crisis.
Source: vanguardngr.com
