Economic Buzz: UK ILO Jobless Rate Increases In Q4

Economic Buzz: UK ILO Jobless Rate Increases In Q4

Average wages increased by 2.5% in the three months to December, below the current level of inflation at 3%, Office for National Statistics data showed today.

British government bond prices rose and sterling briefly fell against the US dollar after Wednesday's figures showed the sharpest rise in the number of people out of work in nearly five years.

The number of unemployed people increased by 46,000 to 1.47m in the three months to December, when compared with July to September 2017. "This change is within the LFS error margin".

"A small rise in unemployment also provides food for thought for the Bank of England, and while one data point hardly constitutes a trend, it does merit keeping a close eye on, particularly if it serves to weaken wage growth from an already low base".

"However, while pay growth appears to be perking up, there are other signs that the labour market is starting to cool", he said, with the unemployment rate rising and the number of unemployed rising for a third successive month, though this was linked to fewer people seeking employment, rather than redundancies.

The number of workers on zero-hours contracts in their main job fell by 4,000 to 901,000 in the quarter to last December compared with the previous year.

Despite the headline rise in unemployment, the figures will likely give support to the Bank of England's desire to raise interest rates in May, given the signs of inflationary pressure amid a still strong labour market. The rate was forecast to remain unchanged at 4.3 percent.

However, the claimant count fell by 7,200 last month to 823,000, said the Office for National Statistics. There were 32.15 million people in work.

But wage increases continue to lag behind inflation, meaning that pay fell by 0.3% in real terms.

Growth in weekly earnings excluding bonuses rose to 2.5%, higher than the average estimate of 2.4% and the figure for the month before, which was revised down to 2.3%. In particular, fewer citizens from eastern European countries were in work than in the year before.

Rising employment in 2017 was driven by United Kingdom nationals, the ONS said.