The UK unemployment rate fell to its lowest level since 1974 as more people retired from the labor force, putting upward pressure on wages.
The government said 3.6 percent of adults were unemployed and looking for jobs in the three months to July, down from the 3.8 percent pace seen in previous months. Economists had not expected any change.
The report also showed that wages were rising well above pre-pandemic averages and long-term illnesses rose to a long-term high. Taken together, the numbers suggest the economy has less room to grow without pushing wages and prices past the Bank of England’s 2% target. This increases the pressure on policymakers to raise interest rates further.
“The cost-of-doing-business crisis is deepening,” said Jane Gratton, head of policy at the UK Chamber of Commerce. “As companies do their best to stay afloat at a time of rising costs, they also face an extremely tight labor market, which further affects their ability to invest and grow.”
Investors expect the central bank to raise interest rates by at least half a percentage point from 1.75 percent next week. There is a chance that the BOE will push through a three-quarter point rise.
Officials led by Governor Andrew Bailey have said they stand ready to act “resolutely” to curb inflation, which has fallen into double digits for the first time in 40 years.
“For businesses, low unemployment means labor shortages remain a very real problem,” said Kitty Ussher, chief economist at the Institute of Directors. “Nonetheless, today’s data also suggests some companies are suspending hiring plans amid a slowing economy.”
The decline in the unemployment rate has been driven by a sharp increase in those classified as economically inactive or not looking for work. A total of 194,000 people left the workforce – the most since the pandemic began. Part of this was due to rising sick leave. Young people who worked also switched back to education.
https://www.independent.ie/business/world/uk-workforce-dropouts-reduce-unemployment-to-lowest-since-1974-41984306.html Loss of work in the UK pushes unemployment to its lowest level since 1974