UK wage growth slows and unemployment rate rises as companies react to Iran war – as it happened
Jobless rate unexpectedly rises to 5% and employment falls by 100,000, biggest drop in six years; economists say June interest rate hike looks less likely
Editorial perspective
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Britain's labour market is showing clear signs of deterioration, with unemployment climbing to 5% while employment contracted by 100,000 workers—the sharpest decline since 2018. The timing is particularly significant as these figures emerged alongside escalating tensions in Iran, suggesting businesses are pulling back on hiring amid geopolitical uncertainty. The wage growth deceleration compounds the picture of weakening economic momentum.
For the Bank of England, this data likely reshapes the near-term policy outlook. Markets had been pricing in a potential June rate increase to combat persistent inflation, but softening employment conditions typically argue against monetary tightening. A weakening labour market could reduce wage pressures and dampen consumer spending, creating disinflationary forces that might do the central bank's work without further rate hikes.
The confluence of geopolitical risk and domestic labour market weakness presents a challenging environment for UK equities, particularly domestically-focused sectors. Sterling may face renewed pressure as rate-hike expectations diminish.
Originally reported by Julia Kollewe
for The Guardian
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Editorial perspective
AI-assistedBritain's labour market is showing clear signs of deterioration, with unemployment climbing to 5% while employment contracted by 100,000 workers—the sharpest decline since 2018. The timing is particularly significant as these figures emerged alongside escalating tensions in Iran, suggesting businesses are pulling back on hiring amid geopolitical uncertainty. The wage growth deceleration compounds the picture of weakening economic momentum.
For the Bank of England, this data likely reshapes the near-term policy outlook. Markets had been pricing in a potential June rate increase to combat persistent inflation, but softening employment conditions typically argue against monetary tightening. A weakening labour market could reduce wage pressures and dampen consumer spending, creating disinflationary forces that might do the central bank's work without further rate hikes.
The confluence of geopolitical risk and domestic labour market weakness presents a challenging environment for UK equities, particularly domestically-focused sectors. Sterling may face renewed pressure as rate-hike expectations diminish.