Hopes of interest rate cut dampened by stubborn wage growth - Chamber

A year-on-year increase in unemployment and stubborn wage growth could dampen prospects of an interest rate cut, business leaders warned today.

According to the Office for National Statistics (ONS), unemployment across the UK rose by 0.5 per cent compared to the same period a year ago (February to April).

Annual pay growth excluding bonuses averaged six per cent in the February to April period, unchanged on last month.

Including bonuses, however, annual wages rose 5.9 per cent.

In the West Midlands, unemployment rose by 0.9 per cent between November 2023-January 2024 and February-April 2024, while the unemployment rate increased by 0.4 per cent.

The region’s unemployment rate increased by just 0.1 per cent year-on-year (compared to February-April 2023), but employment was down by 1.0 per cent.

Emily Stubbs (pictured), head of policy at Greater Birmingham Chambers of Commerce, said: “Today’s data will be carefully reviewed by those at the Bank of England, as well as across Westminster, as the Monetary Policy Committee look for evidence that inflationary pressures are easing.

“However, increased unemployment and stubborn wage growth at the national level may dampen chances of an early interest rate cut.

“In the West Midlands, unemployment has marginally increased over the year, but by less than the figure for the UK as a whole.

“Nevertheless, the proportion of those in the region unable to access meaningful employment opportunities remains among the highest in the country, and our own surveying indicates that many firms remain unable to access the skilled talent they need to fulfil existing orders and grow.

“Amid these challenges, the Chamber’s ongoing Growth Through People Campaign continues to share best-practice approaches to leadership and people management, to ensure local businesses have the skills to get the most out of their existing workforces and to offer expert insights for those seeking to access new talent.”

Find out more and register your place at the next Growth Through People event, on Ethical Enterprise.