UK labour market 'shows signs of slowing' as jobless rate increases unexpectedly

Edmund Heaphy
·Finance and news reporter
Updated
Commuters cross London Bridge, with Tower Bridge in the background, as parts of Britain brace for continuing bad weather, as light fades in London, Monday Sept. 30, 2019. Two more days of heavy downpours are predicted for later this week. (Kirsty O'Connor/PA via AP)
UK wages have continued to grow, according to ONS. Above, commuters cross London Bridge, with Tower Bridge in the background. Photo: Kirsty O'Connor/PA via AP

The unemployment rate unexpectedly climbed in the three months to the end of August, prompting the Office for National Statistics to say that the UK’s labour market “showed signs of slowing.”

Alluding to Brexit, the ONS pointed to “economic and political uncertainties” as one of the factors behind the first quarterly decrease in employment since October 2017.

The number of people in work fell by 56,000 in the period, to 32.69 million. At the same time, the level of unemployment increased by 22,000, to 1.31 million, or 3.9%.

Analysts had expected the unemployment rate to remain at historic lows, and an increase in the number of people in employment.

As expected, however, wages continued to grow at 3.8% compared with the same period a year ago, just below the 4% seen in the three months to the end of July.

“External surveys indicate that economic and political uncertainties are impacting on firms’ hiring intentions,” the ONS said on Tuesday, noting that a British Chambers of Commerce survey found that employers would curtail hiring in the event of a no-deal Brexit.

The fall in the number of people at work was driven by an increase in the number of women, young people, and part-time workers who are unemployed, the ONS said.

“The number of women entering employment has been a strong contributing factor to the current high employment levels, so a fall in their number in employment has had a larger impact on the current level of employment.”

The fall in the number of part-time workers was the largest since August 2011, the ONS said, calling it “the main reason” that there was a fall in overall employment. Compared with the same period a year ago, the number of people at work has increased by 222,000, while the level of unemployment has fallen about 22,000.

“Although the UK has had a good run of strong employment and wage growth, more recent data suggest that uncertainty is starting to bite,” said Jing Teow, an economist at PwC.

“The increase in the unemployment-to-vacancy ratio, a reversal of the consistent downward trend observed since 2011, suggests that labour market tightness is starting to ease and that vacancies are now less difficult to fill,” she said.

“This is consistent with more recent business surveys showing a decline in both output and employment across the private sector economy in the last month as Brexit-related uncertainty has increased.”