Unemployment in the UK is rising, but wages continue to rise, new figures show.
The unemployment rate rose to 4.4% in the three months to April, according to the Office for National Statistics.
The unemployment rate is the highest in nearly a year, up from 4.3% in the three months to February.
The latest ONS figures also revealed there were 904,000 vacancies between March and May this year.
This is 6,000 fewer people than the previous three months and 156,000 fewer people than a year ago.
However, the latest ONS data also revealed that wages, excluding bonuses, continued to rise by 6% between February and April compared to the same period in 2023.
increase in wages
At first glance, increased income is good news for our pockets.
But it could be bad news for borrowers who expect the Bank of England to cut interest rates next week.
In May, decision-makers at the central bank's Monetary Policy Committee (MPC) kept the benchmark interest rate unchanged at 5.25%, the highest level in 16 years.
At the time, analysts and investors believed the rate cut could come as early as June.
However, current figures reveal that wage growth is more than double the inflation rate of 2.3%.
And this won't help convince the Bank of England to cut rates when it meets next week.
Rising wages can cause inflation as businesses raise the prices of services and goods to maintain profits.
Average annual income across the public sector rose by 6.4% between February and April compared with the same three months in 2023, the ONS said.
According to the report, the manufacturing and financial and business services sectors had the highest annual regular growth rates, at 6.9%.
The construction sector had the lowest annual regular growth rate of 2.9%.
The ONS said: “This month's data continues to show that profit growth is relatively strong, but job vacancies are still falling and unemployment is rising, with signs that the labor market may be cooling.” said.
high unemployment rate
High unemployment is obviously bad because it means more people are out of work and without income.
It also means less money will be injected into the economy, potentially slowing GDP.
A decline in GDP means the economy is shrinking and the government has less people's money to spend on public services.
Additionally, your taxes may go up and you may end up with less money left over.
“Employment uncertainty can be very worrying for workers, especially those without backup savings,” said BestInvest's Alice Haynes.
“For people who cannot secure a new job quickly, the economic impact can be severe, as the longer they are unemployed, the more likely they are to have unpaid bills and accumulate debt.
“In times of uncertainty, it is important to build up strong financial reserves that can cover up to six months of expenses.
“Paying off high debt and avoiding unnecessary expenses also reduces concerns about being able to cover long periods without income.”