The UK unemployment rate for those aged 16 and over, between October and December last year, remained at 4.4%, according to figures published by the Office for National Statistics (ONS) released today (18 February). This comes in 10 basis points below the Bank of England’s estimates of 4.5%.
The number of payrolled employees in the UK fell by 14,000 – which equates to 0% – between November and December last year. On an annual basis, however, this increased by 44% to the end of December 2024. On a quarterly basis, payrolled employees fell by 3,000 (0.0%) over the course of the quarter.
The female unemployment rate came in at 4.6% during Q4 last year, while the male unemployment rate of those ages 16 and over amount to 4.6%.
See also: UK GDP increases by 0.1% in Q4 2024
Elsewhere, regular pay excluding bonuses rose by 5.9% year-on-year at the end of 2024, marking the fastest pace of growth since April 2024, while pay including bonuses ticked up by 6%, a rate last seen in November 2023.
Reacting to the figures, Michael Brown, senior research strategist at Pepperstone, said such a pace of growth is “clearly incompatible with a sustainable return to the Bank of England’s 2% inflation target over the medium term”.
“This morning’s data is unlikely to move the needle significantly in terms of the policy outlook, as policymakers continue to place little weight on the figures, owing to… data quality concerns,” he reasoned. “That said, risks to the labour market continue to tilt clearly to the downside, particularly as UK businesses batten down the hatches ahead of April’s National Insurance hike.”
He added: “While the MPC may, in ordinary circumstances, seek to ease policy more quickly in order to provide a cushion against those risks, policymakers are unable to do so at present, with inflationary pressures remaining sticky, ahead of the latest CPI figures due tomorrow morning, and with earnings growth also still at a concerning level.”
Patrick O’Donnell, senior investment strategist at Omnis Investments, said today’s data “corroborates the view that the PMI survey data has been overstating the degree of economic weakness – the most recent prints indicating that employment was falling at a rate on a par with the GFC [global financial crisis]”.
See also: Pridham report: Over half of UK fund groups see sale improvement in end of 2024
“While GDP growth has been pretty anaemic since Q2 2024 and the labour market has been softening, it hasn’t been to the magnitude that the survey data suggests.
“While Governor Bailey played lip-service to the ‘static’ growth picture yesterday, wage growth is still relatively elevated and price pressures are still evident, meaning that we’re not going to see an imminent change in the ‘gradual and careful’ rate-cutting strategy just yet.
“Of course, we get inflation data tomorrow morning, so let’s see if that changes the probabilities for a move at the March meeting.”
Brown’s base case is that the Bank will continue to deliver one 25 basis-point cut per quarter, with the next cut taking place in May.
“Risks to this base case do, however, tilt in a more dovish direction, were a labour market slowdown and subsequent demand crunch to spark a rapid pace of services disinflation, though that seems some way off at present.”
This story was written by our sister title, Portfolio Adviser
