The UK’s unemployment rate has remained steady at 4.3% for the three-month period ending in October, unchanged from the rate recorded in September, according to the Office for National Statistics (ONS). During this period, wages, excluding bonuses, increased by 5.2%, up from 4.9% in the previous three months. This rise in wages, “after a steady slowdown for over a year,” is attributed to “stronger wage growth in the private sector,” as noted by Liz McKeown, Director of Economic Statistics at the ONS. When adjusted for inflation, the real wage increase stands at 2.2%.
“These figures provide a clearer picture of a stable UK labor market,” commented Lindsay James from Quilter Investors. The numbers are closely monitored by the Bank of England (BoE), which focuses on price stability and views wage growth as an indicator of potential inflationary pressures. With inflation still above the BoE’s target of 2%, currently at 2.3%, policymakers face the challenge of balancing price stability with the risk of overly tight monetary policy that could stifle economic activity, as emphasized by Lindsay James.
The BoE had been raising interest rates since late 2021 to tackle a surge in inflation, resulting in higher borrowing costs for both consumers and businesses, particularly in mortgages. However, in 2023, the BoE lowered its rate twice by a quarter point, and analysts predict that the Bank will likely keep the rate unchanged at its next meeting on Thursday. The current rate is 4.75%. Despite the wage inflation being “above historical norms,” Lindsay James points out that this could keep the BoE on alert for future monetary policy decisions.
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The steady unemployment rate and wage growth are key economic indicators that reflect the resilience of the UK labor market amid ongoing inflationary pressures. However, the challenge for the BoE remains to navigate the delicate balance between supporting economic growth and keeping inflation in check. As inflationary concerns persist, the central bank is expected to maintain its cautious approach in adjusting interest rates in the coming months.
In summary, the UK labor market remains relatively stable, with wages continuing to rise, albeit at a pace that the BoE will likely keep monitoring closely as part of its broader strategy to combat inflation.
This article is originally published on lefigaro.fr
