UK unemployment rises as wage growth eases

LONDON, United Kingdom — British unemployment has risen as wage growth has eased, official data showed Tuesday, leaving the door open for an interest rate cut, according to analysts.

The UK unemployment rate rose to 4.2 percent in the three months to the end of February, up from 3.9 percent in the three months to January, the Office for National Statistics (ONS) said in a statement.

“We are now seeing tentative signs that the jobs market is beginning to cool,” said Liz McKeown, ONS director of economic statistics.

The ONS added that average regular pay growth, excluding bonuses, dipped to 6.0 percent from 6.1 percent.

However, taking into account Britain’s annual inflation rate during the period, real wages rose by only 2.1 percent.

“Easing pressure in the labor market keeps the Bank of England on track for a summer rate cut,” commented Yael Selfin, chief economist at KPMG UK.

“The slight easing in regular pay growth will bring some comfort for the BoE which has relied on the pay data as a key gauge of domestic inflationary pressure.

READ: Market hopes high that central banks will cut rates around mid-year

“Moreover, the rise in unemployment rate paints a picture of a less tight labor market.”

The Bank of England in March held its key interest rate at a 16-year high of 5.25 percent, as overall UK inflation remains stubbornly above its 2.0-percent target.

Inflation fell to a near two-and-a-half-year low of 3.4 percent in February, easing the nation’s cost-of-living crisis.