UK jobs market weakens

BBC :

The UK jobs market has continued to weaken, making the prospect of an interest rate cut next month even more likely, analysts say.

The annual rate of pay growth in the three months between March and May slowed to 5 per cent, according to the Office for National Statistics (ONS).

The unemployment rate has risen to 4.7 per cent, its highest in four years, while the number of job vacancies has now been falling continuously for three years.

The government said “we need to go further” to improve the economy, while the Conservatives said the unemployment rise was a “disgrace”.

Earlier this week, in an interview with the Times, the Bank of England governor Andrew Bailey indicated there could be larger cuts to interest rates if the jobs market showed signs of slowing down.

Yael?Selfin, chief economist at KPMG UK, said the “slowing pay growth opens the door for an interest rate cut in August”.

The Bank is widely expected to cut rates from 4.25 per cent to 4 per cent at its next meeting, though some say it would be unwise to encourage spending while inflation is still rising.

Many analysts have said that April’s rise in employer National Insurance contributions (NICs) has discouraged firms from hiring.

While the unemployment rate has risen, the ONS has said the figure needs to be treated with caution due to problems with how the data is collected.