Advertisement

UK's unemployment suffers unexpected rise

The UK's unemployment level has unexpectedly risen by the biggest amount in almost five years, official figures show.

Some 1.47 million people were out of work in the three months to December, an increase of 46,000.

This is the largest rise in the jobless total since early 2013 and the first time it has jumped since the summer of 2016.

The figures from the Office for National Statistics (ONS) sent the pound a cent lower against the US dollar to just over $1.39.

The unemployment rate has now risen to 4.4% from 4.3%, although unemployment is still 123,000 lower than one year ago.

Pay growth also improved - with average weekly earnings, excluding bonuses, up by 2.5%. This is an improvement on the previous figure of 2.3%.

But wage increases continue to lag behind inflation, meaning that pay fell by 0.3% in real terms.

The Bank of England is anticipating a pick-up in wage growth soon - a key reason why it recently signalled that interest rates were likely to rise faster and to a greater extent than previously thought.

Unemployment has been generally falling since a post-recession peak in 2011, apart from a handful of increases, most recently in 2016.

There is no evidence yet as to whether the latest figure is another apparent blip or the beginning of an upturn in joblessness - at a time when wider economic growth has been slowing.

The number of people in work continued to rise over the last three months of 2017 to 32.15 million, but the increase of 88,000 was much smaller than expected.

The fact that there was a rise in unemployment at the same time as rising employment was explained by the fact that the number of economically inactive people - those not seeking or available to work - fell over the period.

Meanwhile, growth in the number of EU nationals working in Britain slowed and the number of eastern European workers fell. Rising employment in 2017 was driven by UK nationals, the ONS said.

In separate update from the ONS, figures showed the second quarter in a row of rising productivity - up 0.8% in the fourth quarter of 2017.

That was a slight slowdown from 0.9% in the third quarter but combined, these represented the best two quarters for productivity since the 2008/9 recession.

A further tranche of official data showed the Government recorded a better than expected budget surplus of £10bn in January - a traditionally bumper month boosted by a surge of income tax receipts.

The independent Office for Budget Responsibility (OBR) said it meant borrowing for the fiscal year to the end of March would come in lower than it had previously forecast "by a significant margin".

The various figures were hailed by Chancellor Philip Hammond as good news on the path to "an economy fit for the future".

But TUC general secretary Frances O'Grady said the continued squeeze on real terms pay was "pushing families to the brink".

Chris Williamson, chief business economist at IHS Markit, said the labour market update contained "mixed messages" for Bank of England rate-setters.

He said: "While an upturn in pay growth opens the door further for interest rates to rise again, possibly as soon as May, signs of the labour market losing steam add to worries that the economy is struggling under heightened uncertainty."