The UK unemployment rate decreased to 4.9% in the three months ending February, down from 5.2% in the previous three months, as reported by the Office for National Statistics. During the same period, average wages rose by 3.6%, slightly lower than the 3.8% growth in January. Pay, including bonuses, increased by 3.8%, surpassing expectations.
These figures reflect the economic situation before the full impact of the Middle East conflict. Analysts anticipate the conflict may lead to inflation and potential job losses as businesses, facing higher costs, may reduce hiring. Wage growth in the public sector averaged 5.2%, compared to 3.2% in the private sector.
Job vacancies decreased in the latest quarter, with estimates showing a decline of 29,000 to 711,000 compared to the previous period, marking the lowest vacancy level since early 2021.
Liz McKeown, ONS Director of Economic Statistics, noted that while unemployment decreased, the number of inactive job seekers increased. Wage growth slowed, reaching its lowest rate in over five years.
Yael Selfin, chief economist at KPMG UK, pointed out that wage growth was easing prior to the Middle East conflict. The current state of the labor market is weaker, potentially limiting workers’ bargaining power. The Bank of England is expected to maintain interest rates amid these conditions.
Luke Bartholomew, deputy chief economist at Aberdeen, emphasized that the drop in unemployment may not be significant to the market due to factors like rising inactivity rather than increased hiring. The upcoming inflation data will provide insights into the impact of recent events on the economy.
The data underscores the evolving economic landscape, with challenges posed by geopolitical events affecting various aspects of the UK labor market.