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United Kingdom Unemployment December 2022

United Kingdom: Labor market remains an economic bright spot in Q4

According to the ONS, in September–November the unemployment rate registered 3.7%, while the redundancy rate was below pre-pandemic levels. Employment continued to increase in December, and job vacancies were at historically high levels in Q4.

These figures show that the labor market remains resilient, which should provide support to private consumption in the face of double-digit inflation and declining real wages.

Looking ahead, the labor market is set to lose steam as economic momentum weakens, although the rise in the unemployment rate will be limited.

On the outlook, INGs James Smith said:

“We […] suspect firms will be more inclined than usual to ‘hoard labour, and avoid layoffs where possible to insure against potential rehiring problems when conditions improve. While we suspect the unemployment rate will rise, we think it will be more modest than during some past recessions. The clear risk here is that, with 70% of SME debt on floating interest rates and the effective rate on this lending already dramatically higher, firms are forced to make material cutbacks to their workforce regardless.”

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