UK unemployment rose to a four-year high of 4.7% in May, surprising economists and pointing to a labor market slowdown. Wage growth has eased, with average weekly earnings excluding bonuses falling to 5%. Payroll estimates show a drop of 41,000 jobs in June, leading to a yearly contraction of 178,000 jobs. The Bank of England has cut interest rates twice already in 2025 and may cut again in August due to inflation at 3.6%, surpassing its 2% target, while wage growth remains targeted at 3%.
The UK unemployment rate rose to 4.7% in May, a four-year high, surprising economists and reinforcing concerns over a slowing economy.
Average weekly earnings fell to 5%, while payroll numbers show a decline of 41,000 jobs in June, leading to overall contraction of 178,000 jobs yearly.
Governor Andrew Bailey noted the Bank of England is "ready to act" if the labour market worsens, having already cut rates from 5.25% to 4.25%.
June's inflation rate of 3.6% remains above the Bank's 2% target, complicating the Monetary Policy Committee's decisions around further interest rate cuts.
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