Unemployment up but wage growth improves

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Unemployment rose by 24,000 to 1.45 million in the three months to January – but wage growth improved, official figures show.

It is the second month in a row the Office for National Statistics (ONS) has reported an increase in the jobless total – a rare setback in a broad trend of falling unemployment going back to 2011.

But hopes for an end to the cost-of-living squeeze for those who are in work were boosted as the figures showed wage growth – excluding bonuses – improving to 2.6%.

That was the highest rate since November 2016, and up from 2.5% reported last month.

Average pay is still falling, in real terms, because wage settlements lag behind the increase in the cost of living.

But separate figures published on Tuesday, showing a fall in inflation for February, suggested the gap was narrowing and that pay growth would soon pull ahead.

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Wednesday’s jobs data also showed an increase of 168,000 in the number of people in work to 32.2 million, a record high.

The pound – already buoyed this week by the announcement of a Brexit transition deal – rose by nearly a cent against the US dollar to nearly $1.41.

Signs of a pick-up in pay growth could be seen as likely to fuel higher inflation and add pressure on the Bank of England to raise interest rates as soon as May.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Wage growth still isn’t quite beating inflation, but both pay and prices now appear to be moving in the right direction for UK consumers.

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“However there are a number of competing factors which muddy the short term picture for wages.

“The collapse of Carillion and the continued problems faced by high street outlets will act as a constraint on further progress in the labour market.”

From – SkyNews

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