The unemployment rate in the UK recently went up for the first time in over two years, according to newly published data. However, better earnings growth is likely to boost speculation that the Bank of England will raise interest rates sooner rather than later.
The Office for National Statistics (ONS), has revealed that the rate of unemployment rose slightly to reach 5.6% in Q2 this year. The number of people registered as employed dropped by 67,000, largely influenced by a reduced level of part time jobs.
This is the first time that the unemployment rate has risen since the beginning of 2013, just before the economy in the UK started to come out of recession.
The new data also suggests that the job market stayed weaker during June, with an additional 7,000 people submitting a claim for unemployment benefits. This is the first rise since autumn 2012.
The average weekly earnings (total) in the same period (inclusive of bonuses) rose 3.2% – the largest per quarter increase since back in April of 2010, according to the ONS. Removing bonuses from the equation, pay went up by 2.8% – the greatest increase in nearly seven years.
Economists questioned as part of a Reuters poll had collectively predicted that total earnings would go up by 3.3%, with a 3.0% rise when excluding bonuses.
It is believed that the Bank of England will pay close attention to wage levels, as it reflects upon when to kick off an interest rate hike. At present, the rate stands at the historic low of 0.5%.
The earnings boost plus record low levels of inflation have combined to increase the disposable income in many UK households. This has come as some relief after a five year period of worsening living standards. Consumer prices remained unaltered in the year to June, according to a separate report.