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United Kingdom Unemployment May 2023

United Kingdom: Labor market shows strength midway through Q2

According to the ONS, in February–April the unemployment rate registered 3.8%, down 0.1 percentage points from the previous rolling quarter. In May, employment rose by 23,000 from April, and April’s reading was revised from a contraction to a small expansion in employment. Moreover, nominal pay growth was the fastest seen outside the Covid-19 pandemic in the three months to April. However, real wages continued to decline due to high inflation, and job vacancies fell in the three months to May.

These figures show that the labor market remains resilient midway through Q2, which should be supporting spending. Looking ahead, the labor market is set to lose steam as higher interest rates take wind out of the economy’s sails, with the unemployment rate rising above 4% later this year.

On the data, ING’s James Smith said:

“The unexpected fall in the unemployment rate to 3.8%, which is still pretty close to all-time lows, underscores the overall resilience of the labour market right now. At the margins, there are still some signs of cooling, with vacancies edging lower and the redundancy rate higher, though both still look stronger than long-term averages.”

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