Unemployment rate moves higher, plus latest claimant count figures for the West Midlands revealed

The Office for National Statistics (ONS) said the rate of UK unemployment rose to 4.3 per cent in the three months to March, which is the highest since May to July last year and up from 4.2 per cent in the previous three months. The West Midlands figure for January to March stands at 5.1 per cent.

The figures also showed regular average earnings growth remaining unchanged at 6 per cent in the three months to March.

While this helped wages outstrip Consumer Prices Index (CPI) inflation by 2.4 per cent – the highest since the three months to August 2021 – it is unhelpful for the Bank of England in its battle to rein in inflation.

The Bank is watching the jobs market and wages in particular closely as it looks to bring CPI back to its 2 per cent target, and cooling earnings growth is seen as being key to paving the way for it to begin cutting interest rates.

Most economists were expecting earnings growth to fall to 5.9 per cent, marking the second time in a row that the decline in earnings growth has failed to match forecasts.

Liz McKeown, ONS director of economic statistics, said: “We continue to see tentative signs that the jobs market is cooling, with both employment from our household survey and the number of workers on payroll showing falls in the latest periods.

“At the same time the steady decline in the number of job vacancies has continued for a 22nd consecutive month, although numbers remain above pre-pandemic levels.”

“Earnings growth in cash terms remains high, with the recent falls in the rate now levelling off while, with inflation falling, real pay growth remains at its highest level in well over two years,” she added.

In other signs of a cooling jobs market, more timely figures from HM Revenue & Customs estimated the number of UK workers on payrolls tumbled by 85,000 to 30.2 million in April, which is the largest fall since May 2020, although the ONS said this was subject to revision.

Vacancies in the jobs sector also dropped by 26,000 quarter on quarter to 898,000 in the three months to April.

However, the West Midlands claimant count covering those claiming unemployment benefits, including Universal Credit, last month was 184,890, down from 186,525.

In Shropshire, the figure was 4,370 (2.3 per cent of the working population), down from 4,405.

In Telford and Wrekin, the number was 4,185, down from 4,240 while the figure is Powys was 1,735 (2.3 per cent of the working population), down from 1,750.

The number of claimants in Dudley last month stood at 8,915 – 4.5 per cent of the working population – down from 9,205.

In Sandwell, the figure stood at 13,435 (6.2 per cent), down from 13,540 while the figure in Walsall was 9,600 (5.5 per cent), down from 9,780.

Wolverhampton stood at 12,015 (7.3 per cent), a drop from 12,305.

The number of people claiming benefits in Staffordshire stood at 15,805 (3 per cent of the working population), down from 16,130.

In Cannock Chase the number was 2,115 (3.4 per cent), down 40 from 2,155 while the figure for Lichfield was 1,470 (2.3 per cent), a fall from 1,555 in March.

In South Staffordshire the figure stood at 1,710, compared to 1,745 previously. In Stafford the number was 2,130 (2.6 percent) down from 2,165 while in Tamworth the number of claimants was 1,740, 3.6 per cent of the working population.

In Birmingham, the number of claimants was 66,710 (9 per cent), down from 66,875 and for Wyre Forest, including Kidderminster, the claimant count figure stood at 1,805, down from 1,865 the previous month.

Chancellor Jeremy Hunt said: “This is the 10th month in a row that wages have risen faster than inflation, which will help with the cost-of-living pressures on families.

“While we are dealing with some challenges in our labour supply, including pandemic impacts, as our reforms on childcare, pensions tax reform and welfare come online I am confident we will start to increase the number of people in work.”

The data comes after official figures last week showed the UK emerged from a short and shallow recession, with gross domestic product (GDP) up 0.6% in the first three months of the year.

Experts said the latest jobs data showed the impact of interest rates remaining at their highest since 2008, at 5.25%.

Alice Haine, personal finance analyst at Bestinvest, said: “The likelihood of a summer rate cut, with many consumers pinning their hopes on a move as early next month, may be slightly dented by the better-than-expected pay growth data.”

Rob Wood, of Pantheon Macroeconomics, said he believed a rate cut in June was still “on track” despite the strong wages growth.

“That said, strong wage growth will likely stop the Monetary Policy Committee cutting bank rates quickly, so we look for them to reduce interest rates at alternate meetings after June — in September and December — and then four times in 2025,” he said.

There were an estimated 22,000 working days lost because of labour disputes across the UK in March, according to the ONS.

It added that the number of people classed as economically inactive rose to 9.4 million in the first three months of 2024 – up 1.1% quarter-on-quarter and 3.3% higher than a year earlier.