Back when the UK general election was called, today was identified as a key date to take the health of the economy. That’s because the latest labour market data is being released, the first of five pieces of important economic news which will test Rishi Sunak’s claim that his economic plan was working. The data will also be watched at the Bank of England, as well as across Westminster, as central bankers look for evidence that inflationary pressures are easing. And the big news is that unemployment has risen, while wage growth remains stickily high – which may dampen hopes of an early interest rate cut. The Office for National Statistics has reported that the number of people unemployed rose by 138,000 in the February-April quarter, taking the total to just over 1.5 million. This lifts the UK unemployment rate to 4.4%, the highest since July-September 2021. The number of people in work has fallen, by 139,000, to 32.97 million. And 132,000 more people fell out of the labour market altogether, partly due to ill health, taking the total of economically inactive up to 9.434m. That left the economic inactivity rate at 22.3% for the three months to April, up from 22% in the previous quarter. The data also shows that companies are cutting back on hiring, with the number of vacancies in March to May 2024 falling by 12,000 to 904,000. The ONS says: "This month’s figures continue to show signs that the labour market may be cooling, with the number of vacancies still falling and unemployment rising, though earnings growth remains relatively strong." But wage growth did not slow, despite this cooling demand for workers. The ONS reports that annual growth in regular earnings (excluding bonuses) was 6.0%, the same as for the previous three-month period; and annual growth in employees’ average total earnings (including bonuses) was 5.9%, the same as for the previous three-month period. The agenda • 7am BST: UK labour market statistics • 11am BST: NFIB index of US small business optimism • Noon BST: Fireside chat with ECB chief economist Philip Lane at the Banking and Payments Federation Ireland National Conference in Dublin • 2pm BST: Russia trade balance for April We’ll be tracking all the main events throughout the day ...
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