The UK unemployment rate rose to 5% in the three months to September, with the Bank of England (BoE) predicting it will stay that high for the foreseeable future.
According to the Office for National Statistics (ONS) unemployment is at its highest rate since the period covering December 2020 to February 2021 and is higher than expected.
Liz McKeown, director of economic statistics for the ONS, warned: ‘These figures point to a weakening labour market.’
The number of people on company payrolls fell by 180,000 in the year to October, a drop of 0.6%, which is more than forecasters had predicted, while pay growth has slowed in the same period.
ONS data shows nearly 1.7 million people are currently receiving unemployment benefit – a decrease on the figure from a year ago.
The BoE is now widely predicted to cut interest rates at its next quarterly meeting on 18th December.
Chris Beauchamp, chief fianancial market analyst at IG International, responded to yesterday’s figures, saying: ‘The chances of a December rate cut have risen throughout the morning following the unemployment figures, and now stands at 86%…
‘Some of the impact of lower borrowing costs will be offset by the expected tax rise heading our way in the Budget, but further rate cuts also loom on the horizon, particularly if inflation keeps coming down too.’
The ZEW economic research institute’s economic sentiment index has dropped to 38.5 points from 39.3 points in October, dashing hopes of a rise to 41.
ZEW president Achim Wambach said: ‘The overall mood is characterised by a fall in confidence in the capacity of Germany’s economic policy to tackle the pressing issues.’
There is new data showing UK investors pulling cash out of global share funds at a record pace, with £3.63bn pulled out of equity funds in October, the fifth month of selling in a row – the longest stint of selling since the Brexit referendum in 2016.
