Although the UK unemployment rate rose in the second quarter, wage growth accelerated more than expected, raising the chances of the Bank of England raising interest rates by another quarter-point in September.
Data from the Office for National Statistics showed that the jobless rate rose to 4.2 percent in the three months to June, while it was forecast to remain unchanged at 4.0 percent.
Pay-rolled employees increased 97,000 monthly in June. Employment totaled 30.2 million.
In the three months to July, the number of vacancies fell 66,000 sequentially to 1.02 million. Vacancies decreased on the quarter for the 13th consecutive period.
Regarding wages, the ONS said average earnings excluding bonuses grew 7.8 percent annually in the second quarter, faster than the expected increase of 7.4 percent. This was the biggest increase in wages since records began in 2001.
Similarly, average earnings including bonuses climbed 8.2 percent compared to economists’ forecast of 7.3 percent.
Capital Economics’ economist Ruth Gregory said the elevated wage growth suggested that the Bank of England has a bit more work to do and support the view that the central bank will raise rates to 5.50 percent in September before bringing its tightening cycle to a close.
Nonetheless, the economist said much will still depend on the next labor market release and next two CPI inflation data releases.
Elsewhere, ING economist James Smith said there are growing signs that the labor market is softening, but for now the BoE will remain focused on stubbornly high wage growth.
“A September hike is highly likely, but November is more of a question mark,” Smith added.
The BoE has increased its benchmark rate over the past 14 consecutive meetings. At 5.25 percent, the bank rate is currently the highest since early 2008.
In July, jobless claims increased by 29,000 from June, the ONS reported. The claimant count rose to 4.0 percent from 3.9 percent in June.
About 160,000 working days were lost because of labor disputes in June, data showed. Over half of the days lost were in the Health and Social Work sector.
Another data from the ONS showed that output per hour worked rebounded 0.7 percent in the second quarter, in contrast to the 1.4 percent decline in the first quarter.
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