- Nick Palmer, an ONS statistician
The British unemployment climbed for the first time in more than two years, while faster earnings growth suggests the Bank of England would continue to signal an interest rate hike is moving closer. According to the Office for National Statistics, the jobless rate rose to 5.6% in the three months through May, as the number of employment dropped by 67,000 due to fewer part-time workers. At the same time, average weekly earnings rose at an annual 3.2%, marking the fastest pace in more than five years. Economists predict the wage growth to continue throughout the rest of the year, as it becomes increasingly difficult to find appropriate candidates to fill job openings.
The fact that the unemployment rate rose for the first time in two years, while wages continued to climb, indicates the UK economy is nearing full capacity, adding more pressure on the Bank of England to begin considering tightening monetary policy. BoE policy maker Martin Weale suggested the BoE may start the first round of rate lifts as early as August this year, given the UK labour market has been tightening in recent years, while wage growth accelerates considerably. Earlier this week Mark Carney, BoE Governor, hinted that the central bank may raise rates earlier than expected.
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