UK unemployment rate in line with expectations

Likely that Bank of England will raise rates by another 50 bps at next meeting

17 January 2023

The latest UK unemployment rate came in at 3.7%, in line with expectations, but 3-month average rolling earnings up to November last year came in at 6.4%, higher than a year prior, which highlights that inflation dynamics in the UK are starting to become a bit sticky. This increases the likelihood that the Bank of England (BoE) will continue its rate hiking campaign next month by another 50 bps. An inflation spiral ever higher with higher prices leading to higher pay demands is something the government is very keen to avoid and, judging by the 3.3% increase in public sector pay, this is something it is succeeding on. However, the BoE is equally keen to try to stop inflationary wage growth developing in the private sector, which came in much higher at 7.2%, suggesting it better get its running shoes on.

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Charles Hepworth

Investment Director
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