UK Unemployment Drops; Job Vacancies At Record High

The UK unemployment rate decreased in three months to July and job vacancies exceeded one million for the first time on record, data published by the Office for National Statistics showed on Tuesday.

The unemployment rate dropped 0.3 percentage points from the previous quarter to 4.6 percent in three months to July. The rate came in line with economists’ expectations.

At the same time, the employment rate rose 0.5 percentage points to 75.2 percent.
The number of employed persons increased 183,000 from the previous quarter to 32.35 million.

Average earnings including bonus grew 8.3 percent on a yearly basis and regular pay that excludes bonuses advanced 6.8 percent in May to July period.

The ONS said since this growth is affected by base and compositional effects, interpretation should be taken with caution.

The number of job vacancies rose to a record 1,034,000 in June to August period as all industries showed positive quarterly growth. The fastest rate of growth was seen in other service activities, followed by transport and storage.

Further, data showed that the claimant count decreased by 58,600 from the previous month in August. The claimant count rate came in at seasonally adjusted 5.4 percent versus 5.6 percent in the previous month.

Chancellor Rishi Sunak said the latest figures showed the government’s plan for jobs was working. The government’s focus remains on creating opportunities and supporting people’s jobs, he said.

Overall, the Bank of England is going to have a tricky task juggling a tightening labor market, rising inflation and a weakening in the near-term activity outlook, Ruth Gregory, an economist at Capital Economics, said.

But inflationary pressures are likely to subside in 2022 and that interest rates would not be raised until mid-2023, rather than in mid-2022 as the markets expect, the economist added.

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