UK unemployment jumps by the most in 5 years as wages continue to grow ahead of expectations

  • UK headline unemployment increased from 4.3% to 4.4% between October and December 2017.
  • The increase represents the first time since 2016 that the unemployment rate has risen and it is the sharpest increase in nearly five years.
  • ONS data shows average wages increased more than expected over the same period, climbing by 2.5%.

LONDON – Unemployment in the UK unexpectedly rose between October and December last year, according to new data released by the Office for National Statistics on Wednesday.

The headline unemployment rate, which measures the percentage of the British workforce who want a job but don’t have one, rose from 4.3% to 4.4%.

There were 1.47 million unemployed Brits in the final quarter of 2017, an increase of 46,000 from July to September last year.

“This is the sharpest increase in the unemployment level the ONS has seen in almost five years,” said Matt Hughes, a senior statistician from the ONS.

Wednesday’s data marks the first time since August 2016 that the UK’s headline rate of unemployment has climbed. The unemployment rate has fallen by such a degree in recent years that some commentators have described the situation as Britain’s “jobs miracle.”

Here’s the chart showing the small upward move in unemployment in the last three months:

Office for National Statistics

Average earnings beat forecasts, the ONS said, with earnings (both including and excluding bonuses) increasing by 2.5% over the data period, compared to an expectation of 2.4% growth.

But Hughes pointed out: “Earnings continue to grow more slowly than prices.”

The UK’s Consumer Prices Index (CPI) inflation rate – the key measure of inflation – remained at 3% in January. That means that while earnings growth may be picking up, people are still not seeing wages rise quick enough to keep up with prices.

The Bank of England expects real wage growth to move into positive territory during 2018.

The bank’s monthly agents’ summary of business conditions, which polls the central bank’s operatives in the UK’s regions for a picture of what’s going on in the economy, last week showed that businesses expect wage growth to increase to 3.1% in 2018, up from 2.6% last year.

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