UK unemployment falls to 4.9% as wage growth cools
UK unemployment falls to 4.9% as wage growth cools
Unemployment dips to 4.9% in February while wage gains ease, signaling a mixed outlook as energy costs and global tensions loom.
UK unemployment unexpectedly slipped to 4.9% in the three months to February, the latest snapshot of a labour market that has managed to hold its ground even as global tensions resurface. Excluding bonuses, pay growth eased to 3.6% year on year, the slowest pace since late 2020, while including bonuses wages rose to 3.8%, cooling from 4.1% in the previous quarter. The figures suggest some hiring activity persisted even as uncertainty weighed on firms' plans, and economists welcomed the headline dip while warning the trend could reverse if costs rise and demand softens.
Beyond the unemployment rate, payrolls fell by 11,000 in March to 30.3 million, and vacancies edged down from 721,000 to 711,000 in March. The data capture dynamics before the latest energy-price pressures linked to the Middle East conflict, which economists say could tilt the labour market toward tighter costs and potential firings in the months ahead.
Analysts caution that the improving headline could mask a more fragile undercurrent. While the jobless rate has stopped ticking higher for now, unemployment might drift up as firms scale back recruitment in response to higher energy costs and softer demand. The Bank of England will weigh these mixed signals as it considers its next move on interest rates, particularly in an environment where wage growth is cooling but vacancies remain above pre-pandemic levels.
Taken together, the data paint a picture of a labour market that is resilient but not immune to headwinds. If energy costs stay elevated and global tensions persist, the upcoming months could bring a slower hiring pace and more volatility in pay growth. For workers and businesses alike, the next round of numbers will be a crucial test of how deep the resilience goes.
