UK unemployment rose to 5 percent in the three months to September, signaling a slowdown in the jobs market, according to new data from the Office for National Statistics (ONS).
This marks the highest level since the period from December 2020 to February 2021 and has strengthened expectations of a possible interest rate cut in December. The figure also exceeded analysts’ forecasts of 4.9 percent ahead of the government’s Budget announcement on 26 November.
Average earnings grew by 4.6 percent in the third quarter, slightly below the 4.7 percent recorded in the previous period. While the rise in unemployment poses a challenge for the government, it has increased speculation that the Bank of England may lower rates when its Monetary Policy Committee meets on 18 December.
Danni Hewson, head of financial analysis at AJ Bell, said expectations for a rate cut had grown, adding that “until we see all the chancellor’s workings in black and white, no one is taking anything for granted.
The Bank of England projects unemployment to remain close to 5 percent in the coming years. Commenting on the latest data, Liz McKeown, director of economic statistics at the ONS, said the figures highlight a softening labor market.
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