UK Jobless Rate Falls Unexpectedly

(RTTNews) - The UK jobless rate eased unexpectedly to the lowest since 1974 and more people dropped out of workforce making it difficult for businesses to find employees to fill vacancies, official data showed Tuesday.

The jobless rate fell to 3.5 percent in three months to August from 3.6 percent in three months to July, the Office for National Statistics reported. This was the lowest since December to February 1974. The unemployment rate was forecast to remain unchanged at 3.6 percent.

The economic inactivity rate increased 0.6 percentage points to 21.7 percent in the June to August period. The ONS said quarterly increase was driven by people inactive because they are long-term sick or because they are students.

Data showed that the estimated number of vacancies fell by 46,000 on the quarter to 1,246,000 in July to September period. This was the largest decrease on the quarter since mid 2020.

Average earnings including bonuses grew 6.0 percent from the last year in three months to August compared to the expected increase of 5.9 percent.

Excluding bonus, regular pay was up 5.4 percent annually, faster than economists' forecast of 5.3 percent. This was the strongest growth in regular pay seen outside of the coronavirus pandemic period.

In September, jobless claims increased 25,500 from August, much bigger than the expected increase of 4,200. The claimant count held steady at 3.9 percent.

Payrolled employees showed another monthly increase of 69,000 to a record 29.7 million in September.

Once again, today's data confirms that the UK is facing the tightest labor market in years, British Chambers of Commerce Head of Research, David Bharier, said. Labor shortages are holding back the ability of many businesses to service existing customers and grow.

While the jobless rate stands at the lowest since 1974, the increasing economic inactivity rate should be a cause for concern, with long-term sickness cited by the ONS as a key driver of this, Bharier added.