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United Kingdom Labor Market September 2022

United Kingdom: Unemployment rate falls in June–August

According to the ONS, in June–August the unemployment rate registered 3.5%, down 0.3 percentage points quarter on quarter and below its pre-pandemic level. That said, the drop was driven by higher inactivity, as the employment rate fell in the same three-month period. Moreover, the number of job vacancies fell at the fastest pace in over two years in the three months to September.

While the labor market remains a bright spot in an otherwise gloomy economic panorama, the latest data suggests that demand for workers continues to cool, and nominal wage growth, at 6%, continues to run well below the rate of inflation. The unemployment rate is forecast to rise above 4% heading into 2023 as the economy slows.

On the implications of the latest figures, ING’s James Smith said:

“positive headline figures mask some concerning underlying trends. Employment is still well below pre-virus levels, and the number of people inactive – ie neither working nor actively seeking a job – has risen by more than half a million since Covid-19 began. […] These figures are up by almost 170,000 people in the past three months’ worth of data alone. It’s hard to escape the conclusion that this is at least partly linked to delays in the NHS.”

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