UK unemployment rate in April lowest in nearly 50 years

UK unemployment rate in April lowest in nearly 50 years


The UK labor market tightened even further in April as skills shortages crippled the economy.

The number of people claiming unemployment benefits fell by 56,900, the fifth straight month of decline by more than 50,000 people and a more-than-expected drop of 42,500. The unemployment rate is now at its lowest level since the early 1970s.

The labor shortage has given new impetus to wage growth, which continues to run at a rate higher than the Bank of England considers compatible with low inflation. 

Average earnings including bonuses grew 7.0% for the year through April, up from a 5.6% rate through March and the fastest growth in seven months. Excluding bonuses, wages rose 4.2%, up from 4.1% a month earlier.

Even at the current rate of growth, wages have not kept pace with inflation, at an annual rate of more than 7% through April. As a result, there appears to be no relief from the spending crisis. The cost of living is covering the economy.

The Governor of the Bank of England, Andrew Bailey, told parliament on Monday that he would be "impossible" to prevent inflation from peaking at more than 10% by the end of the year. In particular, he points to a push in global food prices due to Ukraine's inability to export its agricultural products.

Markets reacted to the data by pricing in more rate hikes from the Bank, despite the fact that, at their most recent meeting, they forecast the economy would begin to correct in the end of the year under the pressure of high food and energy cost inflation. By 3:45 AM ET (0745 GMT), the pound was up 0.5% at $1.2383, its highest level in almost a week.

Bailey gave no indication in his guidance on Monday that the Bank would change course.

"It's a very, very difficult place," Bailey said. "To project 10% inflation and say there's not much we can do about it is an incredibly difficult place."

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