It was a tenth of a percentage point higher in the previous three-month period to the end of February. But soaring inflation, excluding bonuses, led to the biggest annual fall in real incomes since 2013. That’s according to figures published today by the UK Statistics Authority. For the first time since the figures are published, there are fewer unemployed than job vacancies.
Analysts had estimated that the unemployment rate would remain at the level seen at the end of February. On a year-on-year basis, the unemployment rate was 1.2% lower. Unemployment is even lower than in the time before the covid pandemic.
The increase in the employment rate was due to an increase in the transition of persons aged 16 to 64 from unemployment to employment. However, there has also been a record shift of people from economic inactivity to employment. The total number of moves from one job to another also increased to a record 994,000 between January and March 2022, due to resignations rather than redundancies.
Everything now revolves around the high price of energy
The labour market situation is being closely watched by the Bank of England, which is concerned that stronger wage growth could entrench the current rise in inflation caused by higher energy prices.
Total wages rose 7% in the first quarter compared with a year earlier. That’s well above the average economists’ forecast, which had called for a 5.4% increase. But ordinary wages excluding bonuses rose only slightly more than expected, by 4.2%. Adjusted for inflation, ordinary wages were thus 2% lower than a year ago, the biggest drop since the three-month period to September 2013.
The labor market remains strong despite the stagnation of the economy at the end of the first quarter. The central bank forecasts that unemployment will rise as soaring energy prices weaken consumer demand, causing the output to fall sharply by the end of the year.