Jun 14, 2022 04:00AM ET
By: AnalysisWatch
Britain's unemployment rate rose for the first time since late 2020 and other measures of the country's hot labour market cooled, potentially easing inflation concerns for the Bank of England, which is expected to raise rates again this week.
With rising inflation weighing on the economy's recovery from the COVID-19 pandemic, official data showed the unemployment rate rose to 3.8 per cent in the three months to April from 3.7 per cent in the previous labour market report for the three months to March.
The increase was the first since the last three months of 2020. Economists polled by Reuters had expected the unemployment rate to fall to 3.6 per cent.
The increase partly reflected a drop in the economic inactivity rate of working-age adults, which measures people who have dropped out of the labour market altogether and are therefore not unemployed.
The rate fell by 0.1 percentage points to 21.3 per cent in February-April, thanks mainly to students looking for work.
Although vacancy growth slowed, it reached a new record high and the fall in the inactivity rate still leaves it well above pre-pandemic levels, meaning the labour market remains extremely tight, Kennedy said.
The pound slipped against the dollar after the data, and yields on shorter-dated UK government bonds fell from recent multi-year highs, as investors downgraded their expectations about the BoE's likely increase in borrowing costs.
Britain's central bank is expected to raise interest rates again on Thursday in a bid to prevent the recent jump in inflation from turning into a long-term problem if employers resort to sharp pay rises to fill vacancies.
Data on Monday showed that the UK economy unexpectedly contracted in April, raising fears of a sharp slowdown.
In April alone, employment fell by 254,000 and the unemployment rate rose to 4.2 per cent from 3.5 per cent in March, although single-month figures can be volatile as a measure of the economy.
Tuesday's data showed regular payroll growth rose slightly to 4.2 per cent in the three months to April, despite expectations of a slowdown. But growth in total wages, including bonuses, slowed to 6.8 per cent from 7.0 per cent.