UK unemployment rate holds steady

The amount of people out of work remained unchanged in October, official data suggested on Tuesday, while wage growth cooled.

According to the latest provisional data from the Office for National Statistics, the unemployment rate was largely unchanged in the three months to October, at 4.2%. Also largely unchanged was the economic inactivity rate, at 20.9%.

Annual growth in total pay was 7.2%, or 7.3% once bonuses were stripped out. That compares to last month’s growth of 7.7% and was a smaller increase than analysts had been expecting, with consensus for 7.5% growth in regular pay.

Once adjusted for inflation, annual total pay rose by 1.3% and regular pay by 1.4%.

The number of vacancies, meanwhile, fell by 45,000 in September to 949,000 in the September to November period.

It is the seventeenth consecutive period that vacancies have fallen, making it the longest unbroken run of quarterly falls ever recorded.

A total of 30.2m people were payrolled employees in November, down 13,000 on October’s revised figure.

Martin Beck, chief economic advisor to the EY Item Club, said: “The pay data is clearly now moving in the right direction from the perspective of the Monetary Policy Committee. But given that annual pay growth is still running at more than twice the pace that would be consistent with the Bank of England’s 2% inflation target, the MPC is likely to stick with its ‘high-for-longer’ message for a little while yet.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The slowdown in wage growth is becoming more established every month, but the MPC likely will wait for signs that this trend will be maintained through the early 2024 pay round before signalling it will reduce bank rate soon.

“Employee numbers edged down in October, and there are a few warning signs that they will continue to fall this winter, albeit gradually.

“The combination of flat-to-falling employment, alongside ongoing growth in the workforce, likely will mean that the unemployment rate continues to drift higher over the coming months.”

Danni Hewson, head of financial analysis at AJ Bell, said: “The big question was whether they’d be anything in this latest set of jobs figures to trouble the BoE rate setters when they meet late this week. The answer is a resounding no.

“There’s been an awful lot of talk about the mythical soft landing and there’s no doubt the full effects of the brutal rate hike cycle are yet to filter through, but so far, the employment see-saw has managed to balance out.”

Interest rates now stand at 5.25%, the highest since 2008, after the BoE raised the cost of borrowing 14 times.

The MPC will announce its latest decision on Thursday.