Unemployment rate rises amid ‘mounting signs of cracks’ in UK jobs market

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Britain’s unemployment rate rose unexpectedly amid growing signs of a cooling in the jobs market as Britain heads into a painful and prolonged recession.

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The unemployment rate rose to 3.6% in the three months to September from 3.5% in the three months to August, official data showed, while vacancies fell for a fifth consecutive year as the economic slowdown prompted employers to rein in hiring .

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The unemployment rate also hit 3.8% in September alone, the highest monthly reading since April.

Most economists had expected the three-month unemployment rate to remain unchanged.

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Despite the fastest increase in pay packets for 22 years, wages have also been outpaced by rising prices, as the cost of living has been severely hit.

It is only a matter of time before the recessionary atmosphere spreads to the labor market as employers increasingly reflect on weakening demand and rising labor costs.

Taking into account consumer price index (CPI) inflation, average earnings excluding bonuses fell 3.8%, even as regular pay rose 5.7%, the Office for National Statistics (ONS) said. The fastest increase since 2000, except during the pandemic, when the end of furloughs skewed the figures.

It came as data showed more people dropped out of the workforce, with an increase in the proportion of people neither looking for work nor working.

The ONS also revealed that more than half a million working days were lost to strikes in August and September – the most in two months in more than a decade.

The latest jobs market report follows official data last week which showed the economy shrank by 0.2% in the third quarter, leaving Britain facing a cost-of-living crisis amid a protracted recession. Is.

Restoring stability and reducing debt is our only option to reduce inflation and limit interest rate hikes

Chancellor Jeremy Hunt said tackling inflation was his “absolute priority” as he prepares to outline expected tax increases and spending cuts in the delayed autumn budget this week.

He said: “It guides the difficult decisions on tax and spending that we will make on Thursday.

“Restoring stability and reducing debt is our only option to reduce inflation and limit interest rate hikes.”

Figures from the Comprehensive Labor Force Survey show that the number of Britons in unemployment fell by 69,000 to 1.2 million between the second and third quarters, but the number of people in employment also fell by 52,000 to 32.7 million.

Economic inactivity rose 0.2 percentage points quarter-on-quarter to 21.6%, driven by people aged 16-24 and 35-49.

According to the ONS, there was a further drop in the number of vacancies, down from 46,000 quarterly to 1.2 million quarterly, due to an increasing number of employers “freezing recruitment” amid the looming economic downturn.

More timely data showed the number of salaried workers rose by 74,000, or 0.2%, to 29.8 million between September and October, but these figures are subject to major revision.

Sandra Horsfield at Investec Economics said the figures indicated “growing signs of cracks in the labor market”.

The Bank of England has predicted a possible two-year-long recession and unemployment is expected to rise as Britain grapples with rising inflation and falling output.

It warned that the unemployment rate is expected to reach around 6.5%, slightly lower than in 2008 in the economic aftermath of the financial crisis.

Yael Selphin, chief economist at KPMG UK, said: “It is only a matter of time before the recessionary atmosphere spreads to the labor market as employers increasingly reflect on weaker demand and rising labor costs.”

Credit: www.standard.co.uk /

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