Britain showed the lowest jobless rate since 1974, however, it is important to note that this fall was because of the reduction in the workforce size, according to a report by Reuters.
The UK's jobs boom is "petering out" even though the unemployment rate sank to 3.6 percent since July 2022, as per the Office for National Statistics. The stagnancy in the country's jobs boom has proved to be a concern for the Bank of England.
Even if the unemployment rate is low, it is a sign that the economy is at risk of a recession. The rise in the number of people in employment i.e. 40,000 is still less than a third of the increase predicted by Reuters poll.
"We're now starting to see signs of a labour market losing its momentum."Jack Kennedy, UK Economist, Indeed.
The share of population who are not in work and not looking for work increased by 0.4 percentage points in this quarter to 21.7 percent which is the highest since the three months until January 2017.
The number of full-time students moving into employment has also reduced compared to the usual number, especially for this time of year.
The rise in the economic inactivity rate was fueled by more people classifying as long-term sick. However, pay growth increased by more than predicted. This rise shows that there is a shortage of candidates for jobs inspite of lagging far behind the expected inflation rate which is expected to rise up to 10.2 percent in the 12 months until August.
The soaring energy prices are likely to force companies to make bigger staff cuts, according to James Smith, an economist at ING.
The weaker-than-expected rise in employment coupled with the decline in the number of job vacancies has led many economists in the United Kingdom to believe that the country is headed towards a jobs and inflation crisis.
"We would expect a more visible impact on the jobs market over the next few months, but the government's newly announced pledge to cap corporate energy bills as well as households' should help avoid a sharp rise in unemployment this winter."James Smith, Economist, ING
(With inputs from Reuters)
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