The Office for National Statistics (ONS) provided unemployment data yesterday that indicated a cooling in the UK jobs market. The number of people unemployed for over six months rose, significantly driving the increase in unemployment. The average increase in annual wages slowed slightly. The Bank of England (BoE) will consider this data as it decides whether to continue with interest-rate cuts next month.

• UK unemployment rose to 4.3% in the three months from July to September. This compares to 4.0% in the previous three months and exceeded the 4.1% anticipated in consensus forecasts.
• Roughly 2.8 million people cannot join the workforce. This is due to health issues and is believed to be restricting the UK’s economic growth, according to Work and Pensions Secretary Liz Kendall.
• The inactivity rate for people between 16 and 24 declined. The percentage of people who were not engaged in looking for work edged down to 21.8% from 22.2% in the same three-month period versus the prior three months. However, the overall economic inactivity rate remained unchanged.
• The ONS warns about low survey participation, which means that some of the short-term fluctuations in the unemployment data should be treated with a degree of caution. This is due to newer surveying techniques that will take more time to have an impact.

Inflation will also be a key consideration for BoE policymakers. In October, inflation related to grocery shopping picked up, with more consumers opting to get a head start on buying treats for the festive season. The BoE is due to make its final interest-rate decision of the year on December 19, one week after the Bank of Canada’s decision.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.