UK unemployment rises as labour market eases ahead of BOE meeting

[LONDON] UK unemployment climbed to its highest level in almost five years and wage growth eased, as a cooling labour market appeared to clear one of the final hurdles to a pre-Christmas interest rate cut by the Bank of England (BOE).

The unemployment rate rose to 5.1 per cent from August to October, 0.1 percentage points higher than the corresponding period in 2024, the Office for National Statistics said on Tuesday (Dec 16).

It was in line with the expectations of economists.

Wage growth excluding bonuses edged down to 4.6 per cent from 4.7 per cent, while the tax data for November showed that the number of employees on payrolls fell by 38,000.

The figures were the first of a raft of key data that may tip the UK central bank into resuming its interest-rate cutting cycle on Thursday, after skipping a move in September and November.

While some rate-setters remain concerned about sticky price pressures, Tuesday’s figures will add to the evidence that the economy has been losing momentum. 

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Before Tuesday’s data, markets put the odds of a quarter-point reduction in the bank rate to 3.75 per cent at almost 90 per cent.

However, Bloomberg’s survey shows that economists expect a tight five-to-four decision in favour of a cut. BLOOMBERG