UK jobs market cooling as unemployment rises, but wages still strong - business live

Source: The Guardian
Author: Graeme Wearden

Introduction: UK unemployment rate rises, but wages still strong

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Britain's unemployment rate has risen as companies cut back on hiring, and more people drop out of the labour market, often due to ill health.

The latest UK labour market statistics, just released this morning, show that the jobless rate has risen to 4.3% in the first quarter of this year, up from 4.2% a month ago and 3.8% in the previous quarter.

That's the highest unemployment rate in nearly a year, since March-May 2023.

Another 166,000 people become unemployed in the quarter, taking the total out of work and looking for a job to 1.486m.

The number of people in employment dropped by 178,000 - another signal that the labour market is cooling - taking the total in work to just below 33 million.

Vacancies fell too: down by 26,000 in the three months to April, to 898,000.

In another worrying sign, the UK's economic inactivity rate jumped to 22.1% in January to March, up from 21.9% in the final three months of 2023. That highlights the rise in people leaving the workforce - perhaps for illness, or due to caring responsibilities.

But pay growth remained strong - which may disappoint the Bank of England as it looks for signs that inflationary pressures are easing.

Regular earnings (excluding bonuses) rose by 6.0% in the last year, while total pay (including bonuses) rose 5.7% - with both readings unchanged compared with last month.

This means that real wages continue to grow, with earnings rising faster than CPI inflation.

The ONS says:

Using CPI real earnings, in January to March 2024, total pay was 2.1%. Growth was last higher in July to September 2021, when it was 3.0%.

Regular pay was 2.4%; growth was last higher in June to August 2021, when it was 3.4%.

Later this morning we'll hear from BoE chief economist Huw Pill, one of the monetary policy committee members who voted to leave interest rates on hold last week.

UK farmers are heading to Downing Street to meet PM Rishi Sunak for the second Farm to Fork summit, to discuss the challenges in the farming industry.

Global investors are bracing for the latest US Producer Price Index (PPI) data, which will show how quickly America's manufacturers and services companies raised their prices last month.

The PPI report could reinforce, or ease, concerns that US inflation is looking sticks.

Stephen Innes, managing partner at SPI Asset Management, explains:

If this month's PPI data doesn't show a decline, there is potential for rates to drift higher, which could lead to a slide in stocks.

And in Miami, mining executives have gathered for the Bank of America Global Metals, Mining & Steel Conference 2024. That includes the CEOs of BHP Group and Anglo American, who are locked in a takeaover tussle after Anglo rejected BHP's second takeover bid.