UK unemployment ticks up slightly to 4.4 per cent, wage growth remains robust at 6 per cent

British unemployment has seen a further increase, with earnings growth staying elevated, according to data released on Tuesday, August 13, by the Office for National Statistics (ONS), newswire AFP reported.

The ONS reported that the UK's unemployment rate rose to 4.4 per cent in the three months leading to the end of April, a slight increase from 4.3 per cent recorded in the previous three months ending in March.

“This month's figures continue to show signs that the labour market may be cooling, with the number of vacancies still falling and unemployment rising, though earnings growth remains relatively strong,” the ONS data stated.

Average regular pay growth, excluding bonuses, remained steady at 6.0 per cent. Analysts consider this a potential concern for the Bank of England (BoE).

"The stickiness of wage growth in April will be a lingering concern for the BoE," remarked Ruth Gregory, deputy chief UK economist at research consultancy Capital Economics. “But with employment falling sharply and the unemployment rate climbing, wage growth will soon return on a firm downward path.”

In light of the situation, the BoE maintained its main interest rate at a 16-year high of 5.25 per cent last month, suggesting the possibility of a summer reduction as UK inflation continues to cool. The central bank is scheduled to announce its latest interest rate decision next week on June 20, with May inflation data expected the day before.

Recent data indicated that UK annual inflation slowed in April to a nearly three-year low of 2.3 per cent, boosting the governing Conservatives ahead of next month’s general election. However, the Consumer Prices Index remained above the BoE's target of 2.0 per cent.

Meanwhile, the Pound rose on Tuesday after the data showed a surprising drop in the UK's unemployment rate in June, accompanied by a slowdown in wage growth. 

The jobless rate fell to 4.2 per cent in June, down from 4.4 per cent in May and counter to expectations of an increase to 4.5 per cent. Following this data release, sterling rose 0.24 per cent to $1.2797 from $1.2779. The euro saw a slight decrease of 0.15 per cent against the pound, at 85.49 pence. Additionally, separate figures revealed that average weekly earnings, excluding bonuses, were 5.4 per cent higher than a year earlier in the three months through June, a decrease from 5.8 per cent in May.

(With Inputs from agencies)