Shock as unemployment rises at fastest pace in five years

Shock as unemployment rises at fastest pace in five years”

United Kingdom unemployment increased unexpectedly at the end of past year but wage data was mixed, which may stoke some further speculation about the Bank of England's likely path for interest rate hikes.

British government bond prices rose and sterling briefly fell against the USA dollar after Wednesday's figures showed the sharpest rise in the number of people out of work in nearly five years.

That was a slight slowdown from 0.9% in the third quarter but combined, these represented the best two quarters for productivity since the 2008/9 recession.

Analysts said that Wednesday's data reduced the likelihood that the Bank of England would raise its main interest rate in May, as had been widely expected by markets.

He said: "While an upturn in pay growth opens the door further for interest rates to rise again, possibly as soon as May, signs of the labour market losing steam add to worries that the economy is struggling under heightened uncertainty".

BoE Governor Mark Carney and other officials are to speak in parliament at around 1415 GMT.

Some 1.47 million people were out of work in the three months to December, an increase of 46,000.

The ONS attributed the rise in unemployment to a fall in the number of people who are neither working nor looking for a job.

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Employment growth was weaker than expected in the three months to December, rising by 88,000 people rather than the 173,000 Reuters poll consensus. And private sector pay growth accelerated to 2.6% from 2.3%.

The rate was forecast to remain unchanged at 4.3%. Private- sector pay gains accelerated to 2.6 percent from 2.5 percent.

This means wages have fallen for the third consecutive reading and still lag inflation which was recorded at 3% for January.

The UK's unemployment level has unexpectedly risen by the biggest amount in nearly five years, official figures show. That was the first rise since the three-month period to August 2016, which straddled the Brexit vote.

The UK has seen the sharpest increase in its unemployment rate in nearly five years, according to the latest data published by the Office for National Statistics.

Meanwhile, growth in the number of EU nationals working in Britain slowed and the number of eastern European workers fell.

Overall migration data have shown a drop in net migration from the bloc into the Britain since the "Brexit" vote. Separate ONS figures showed finance minister Philip Hammond likely to meet his target for cutting Britain's budget deficit this year with room to spare. In midday trading, the pound was 0.5 percent lower at $1.3921.

The finance ministry said Wednesday's figures were considered strong.

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