Fatshimetrie: UK economy faces falling unemployment and mixed wage growth
In a recent Fatshimetrie publication, official figures have confirmed that the UK unemployment rate and wage growth have been in contrasting developments, reinforcing analysts’ expectations that the Bank of England will resume its policy of cutting interest rates next month.
According to data from the Office for National Statistics, the unemployment rate rose to 4.0% from 4.1% in the three months to August compared with the previous three months to July.
Annual growth in average regular employee earnings fell to 4.9% in the same period, reaching its lowest level in more than two years, the ONS added.
The figures support the general expectation that the Bank of England will cut its interest rate from 5.0% to 4.75% at its next policy meeting in November, as Ashley Webb, UK economist at research group Capital Economics, has pointed out.
At its last policy meeting in September, the BoE decided against back-to-back cuts to borrowing rates. In August, it cut its key rate for the first time since early 2020, from a peak of 5.25% to 5.0% as inflation returned to normal levels.
The ONS will present the latest reading of UK inflation on Wednesday, with the annual level expected to be below the Bank of England’s target rate of 2.0%.
The current dynamics of the UK economy raise questions about the Bank of England’s future strategy to support growth while controlling inflation. This delicate situation will require appropriate measures to preserve the country’s economic stability and ensure the well-being of its population.
Fatshimetrie will continue to closely monitor the evolution of these crucial economic indicators and to analyse in depth the implications for the British economy and future monetary policies.