UK unemployment rises for first time in two years

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Commuters cross London Bridge.
Reuters

UK unemployment has risen unexpectedly for the first time in two years.

The rate of unemployment rose from 4.3% to 4.4% for the three months to the end of December, the Office for National Statistics said.

However the total number of people in work also continued to rise, jumping by 88,000 in the same period.

Some of that increase was due to people previously classed as inactive and not looking for work moving into the workforce or registering as unemployed.

The ONS said the slight rise in the number of people out of work raised the question of whether the UK’s long run of falling unemployment had come to an end.

However, John Hawksworth, chief economist at PwC, said the rise was “not a sign of labour market weakness”.

“Instead, it reflects more previously inactive people seeking work, some of them finding jobs and others still searching and so being classified as unemployed.”

Ian Brinkley, acting chief economist from the CIPD, which represents human resources professions said “there are reasons to believe that this is a one-off, as opposed to the beginning of a larger employment crisis.”

How is unemployment calculated? Anthony Reuben Reality Check

The rate of employment and the rate of unemployment are both up, which doesn’t make any sense until you remember how these figures are worked out.

Everyone over 16 is either employed, unemployed or economically inactive. Inactive people are not in work and they are also not looking for work. This includes people such as students, carers and long-term sick people.

What’s happened according to the latest estimates is that a number of people who were previously economically inactive have started working or looking for work.

Real wages

Wages grew by an average of 2.5%, up from 2.4% the previous month, although the increase remained below inflation meaning the squeeze on real pay had continued.

Laith Khalaf, Senior Analyst, Hargreaves Lansdown said: “Wages are heading in the right direction, though the rate of growth is hardly jaw-dropping, and significantly still lags behind the rate of inflation.

“That means the consumer squeeze is still alive and well, and the pick-up in wage growth anticipated by the Bank of England is yet to materialise.”

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