UK unemployment rate holds steady, though slight cracks appear

The headline rate of UK unemployment remained unchanged over the summer, according to official figures released on Wednesday, though jobless claims figures for September provided a positive surprise.

Data from the Office for National Statistics showed unemployment held steady at 4.9%, as forecast, in the period between May and August, with wage growth up 2.3% versus expectations of a 2.1% rise, back in line with June’s rate.

While the headline rate was unchanged, unemployment numbers increased slightly, up 10,000 to 1.66m in the three-month period, while the one-month measure of unemployment moved up to 5.0%.

More recent data from ONS showed a tiny 0.7K rise in September's jobless claims versus 3.2K expected and 2.4K previously.

“These figures show that employment continued to grow over the summer and vacancies remain at high levels, suggesting continuing confidence in the economy," said ONS statistician Nick Palmer.

"While there was also a small rise in the headline unemployment level, that was accompanied by more people actively seeking work."

Economists agreed the result of the Brexit referendum had not yet had much impact on the jobs market.

Chris Williamson at IHS Markit said the data showed "only mild signs of cooling over the summer".

He added: “Surveys have also indicated a waning in the hiring trend in recent, and suggest that we’re likely to see a more severe weakening of the official labour market data in coming months.

Scott Bowman at Capital Economics pointed out that the single-month measure of employment showed growth had slowed, with 105,000 more people in work in August than the 173,000 rise in the three months to July, though the consensus forecast was for a larger fall to 69,500.

He said this was "relatively strong" given the amount of labour market slack used up in recent months.

Although the rebound in earnings should provide some comfort that domestic cost pressures aren’t increasing by much, Bowman thought a rise in the unemployment rate will prevent wage growth from accelerating much further in coming months.

"Accordingly, while the recent strength in economic activity data has lowered the chances of further monetary easing, we still expect another cut in Bank Rate to 0.10% in November."