THE UK’s unemployment rate has remained at four year high as job vacancies shrink again.
The latest figures from the Office for National Statistics (ONS) show the rate reached 4.7% in the three months to July.
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Liz McKeown director of Economic Statistics, ONS, said: “The labour market continues to cool, with the number of people on payroll falling again, while firms also told us there were fewer jobs in the latest period.”
The director said “the weakness is reflected in a slight increase on the quarter in the unemployment rate”.
“The number of vacancies also fell on the quarter, though the rate of decline appears to be slowing.”
The figure is compared to last month’s reading which showed UK’s unemployment rate struck 4.7% in the three months to June.
This was the same as the previous three-month period, which had been the highest level since June 2021.
Meanwhile, UK average regular earnings growth fell to 4.8% in the three months to July and was 1.2% higher after taking Consumer Prices Index inflation into account.
The figures come ahead of August’s inflation reading, which is due to be published tomorrow.
The Consumer Price Index hit 3.8% in the 12 months to July.
The Bank of England is predicting that inflation will rise further this year and should peak at 4% in September, before easing over the next two years.
Just last week, the ONS revealed that Gross Domestic Product (GDP) came to a halt showing no signs of growth in July.
All of these measures will be looked at closely by the Bank of England (BoE) ahead of its monetary policy meeting this Thursday.
Investors will also be looking at the data, worried the Labour Government may struggle to balance the books after a tumultuous time for gilts in the past few weeks.
Shadow Business Secretary, Andrew Griffith said: “Unemployment is becoming the canary in the mine for the damage the government is doing.
“From jobs taxes to their Unemployment Bill, they seem to have zero feel for how to keep people in work.”
What it means for your money
Unemployment remaining high is bad news for households as it means less people earning money and pumping cash into the economy.
Higher levels of unemployment can also increase the number of those on benefits, piling pressure on people who are in work.
On the contrary, when employment is low it can help boost the economy as households have more money to spend.
Slow wage growth is generally also bad news as it means you have less in your pocket.
Less purchasing power means less money pumped into the economy which can see Gross Domestic Product (GDP) slow.
However, the BoE also doesn’t like to see wages rise too fast as it can fuel inflation and erode the value of household’s cash.
Why does inflation matter?
INFLATION is a measure of the cost of living. It looks at how much the price of goods, such as food or televisions, and services, such as haircuts or train tickets, has changed over time.
Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate.
The government sets an inflation target of 2%.
If inflation is too high or it moves around a lot, the Bank of England says it is hard for businesses to set the right prices and for people to plan their spending.
High inflation rates also means people are having to spend more, while savings are likely to be eroded as the cost of goods is more than the interest we’re earning.
Low inflation, on the other hand, means lower prices and a greater likelihood of interest rates on savings beating the inflation rate.
But if inflation is too low some people may put off spending because they expect prices to fall. And if everybody reduced their spending then companies could fail and people might lose their jobs.
See our UK inflation guide and our Is low inflation good? guide for more information.
