The UK unemployment rate unexpectedly falls to its lowest level since 1974

Unemployment in the UK unexpectedly fell to its lowest level since 1974 as record numbers of people left the labor force.

The government said 3.5 percent of adults were looking for work in the three months to August, down from 3.6 percent a month earlier and a lower rate last seen in 1974. Economists had expected no change.

The numbers add to concerns about labor shortages, which are making it harder for companies to find the staff they need to expand. It also fuels wage increases and inflation, which the Bank of England has promised to fight with higher interest rates.

Average non-bonus earnings growth accelerated to 5.4 percent, figures from the Office for National Statistics show. That’s still just over half the inflation rate, meaning a sharp drop in living standards for millions of households.

Complicating these wage increases is the loss of hundreds of thousands of workers since the pandemic began, and there is little evidence that the cost-of-living crisis is prompting them to return.

Inactivity — the number of people who are unemployed and not looking for work — rose at the fastest rate since data began in 1971. About 252,000 became inactive in the last three months, with the rise being caused by long-term illnesses among older workers and young people become students.

The Bank of England has hiked interest rates seven times since September and money markets are pricing in an aggressive 1 percentage point hike when policymakers meet in November.

That will exacerbate the plight of consumers and businesses already grappling with near double-digit inflation. The UK unemployment rate unexpectedly falls to its lowest level since 1974

Fry Electronics Team

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