JOB FIGURES SHOW SIGNS OF LABOUR MARKET WEAKENING – Businesses feel the impact of rising prices and high-interest rates
The UK’s job market is showing signs of weakening, suggesting businesses are feeling the impact of rising prices and high-interest rates.
The unemployment rate was 4.2% between June and August, up from 4% in the March-to-May quarter but unchanged from last month.
UK economic growth has proved sluggish in recent months.
The current economic picture has fuelled expectations that interest rates will be left unchanged.
The Bank of England, which sets UK rates, will decide in November whether to increase, decrease, or keep rates at 5.25%.
It decided to leave its benchmark rate unchanged at its previous meeting after 14 consecutive rises, with governor Andrew Bailey saying there were “increasing signs” that higher rates were starting to hurt the economy.
The Bank first started to increase interest rates in December 2021 to slow the rate consumer prices were rising – which is known as inflation.
But it is a balancing act as raising rates too high can lead to businesses to halt investment plans or make cutbacks and stifle economic growth, which can lead to a recession.
Latest figures for the UK economy showed it returned to growth in August, following a sharp fall in July, but economists have painted a picture of the economy “only just grinding forward”.
Following the jobs numbers, analysts reaffirmed their predictions that the Bank would hold off on further interest rate rises in November.