Azernews.Az

By Bloomberg

U.K. unemployment rose in the second quarter and total wage growth slowed, suggesting some easing in the recovery of the labor market.

The number of people looking for work increased 25,000 to 1.85 million, which left the jobless rate at 5.6 percent, the Office for National Statistics said Wednesday in London. Employment declined by 63,000 in the period.

The report also showed that total pay, which includes bonuses, rose an annual 2.4 percent in the second quarter, down from 3.2 percent the previous month. The drop, sharper than economists had forecast, largely reflects at 3.3 percent decline in bonuses. Underlying pay growth stayed at 2.8 percent, in line with estimates.

On a rolling quarterly basis, it’s the first consecutive decline in payrolls in more than two years. ONS statistician David Freeman said while it’s too early to say the jobs market is leveling off, the figures “certainly strengthen that possibility.” He added that pay growth “remains solid.”

The pound erased its advance against the dollar after the report was published. It was little changed at $1.5567 as of 9:37 a.m. London time.

Labor costs are a key metric for the Bank of England as it moves closer to its first interest-rate increase in eight years. The BOE expects slack in the economy to be used up over the coming year and Governor Mark Carney has signaled it will soon have to response with tighter policy.

Temporary Slowdown

Economists said before the data that the recent slowdown in the labor market is likely to be temporary. The ONS data suggest some improvement in the labor market in the quarter through July, with the unemployment rate for June alone falling to 5.5 percent from 5.8 percent in May.

The “positive domestic environment suggests to us that better labor market data will be forthcoming in the third quarter,” said James Knightley at ING Bank in London. “This backs the BOE message that we are getting closer to a U.K. interest-rate rise.”

A narrower measure of unemployment showed claims for jobless benefits unexpectedly fell 4,900 in July and an increase in June was almost entirely revised away. The rate on that measure was 2.3 percent last month.