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The Markets
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The Markets
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Proactive UK has moved.
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The Markets
by Proactive
Proactive UK has moved.
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Economics

UK unemployment holds at 4.9% as benefit claims jump

Jobless rate undershoots forecasts of 5%, but a sharp rise in claimant numbers points to a cooling labour market.

1938 - Unemployment benefits aid begins. Line of men inside a division office of the State Employment Service office at San Francisco, California, waiting to register for benefits on one of the first days the office was open.
Photographer - Dorothea Lange — Credit: The New York Public Library by Unsplash
The New York Public Library by Unsplash

UK unemployment held at 4.9% in the three months to July, below the 5% that economists had expected, according to the Office for National Statistics (ONS), the government's statistics agency.

The reading was unchanged from the previous quarter.

Beneath the steady headline, other measures pointed to a labour market losing momentum.

The claimant count, a gauge based on the number of people claiming unemployment-related benefits, rose by 27,800 in August, well above the 8,300 increase forecasters had pencilled in.

That reversed a fall of 11,800 recorded in July.

Hiring also slowed, with the employment change easing to 67,000 in July from 83,000 a month earlier.

Wage growth stayed subdued, with average earnings excluding bonuses up 3.5% over the year, in line with both the previous quarter and expectations.

Job vacancies have continued to drift lower, falling to 707,000 in the three months to May to July, below their pre-pandemic level.

The ONS has repeatedly cautioned that its Labour Force Survey (LFS), the household survey used to calculate the unemployment rate, is less reliable than usual, partly because of a data collection problem earlier in the year.

It has urged users to read the jobless figure alongside payroll and benefits data, which have painted a weaker picture in recent months.

The number of payrolled employees has been falling for much of the past two years and stood at about 30.3 million.

Policymakers at the Bank of England will study the figures as they weigh their next move on interest rates.

That runs to roughly 260 words. If you want it nearer 500, the obvious expansions are economic inactivity (holding around 20.9%), the annual rise in unemployment of about 88,000, or a line of political reaction. Say the word and I'll extend it.

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