Ryan FowlerThe UK labour market showed signs of divergence in the latest figures, with the employment rate climbing slightly to 75.1% in the three months to April, up from 75.0% in March. However, the unemployment rate rose to 4.6%, the highest level recorded since July 2021 and in line with market expectations.
Economic inactivity dropped marginally to 21.3%, down from 21.4% in the previous period, suggesting a slight increase in participation. Meanwhile, annual total earnings growth slowed to 5.3%, from 5.5% previously and below the expected 5.4%.
Isaac Stell, investment manager at Wealth Club, said: “The UK labour market is at a crossroads with the unemployment rate ticking higher and hitting its highest rate since July 2021. Wage growth, albeit firmly ahead of inflation also continues to slow.
“This latest batch of data should come as no surprise. Businesses have been burdened with not only a huge rise in their national insurance bills but also rising wage bills following the increase to the national minimum wage in April. Consecutive months of rising unemployment therefore were inevitable as businesses look to manage their costs in the face of fiscal pressure.
“These added costs will likely trickle down into the real economy in due course, as declining wage growth will likely dampen the UK consumers animal spirits as they look to tighten their belts during uncertain times. With the likelihood of further tax rises due in the autumn businesses are also likely to put investment plans on ice. The outlook for UK PLC remains very uncertain.”
