UK Unemployment Rate Remains Low as ‘Uncertainty’ Grows

Even in the face of a recession, the U.K.’s labor market remains extremely tight.

Figures released Tuesday (Feb. 14) by the country’s Office of National Statistics (ONS) showed Britain’s unemployment rate at 3.7% in the final three months of 2022, remaining at a level not seen in five decades.

The report finds England’s jobless numbers in a similar place as that of the U.S., where the rate of unemployment was at 3.4% for January — the same neighborhood where it’s been since early 2022 — according to recent figures from the Bureau of Labor Statistics.

The ONS also found the estimated number of vacancies dropped by 76,000 during the quarter to 1,134,000, the seventh consecutive quarterly decline.

“The fall in the number of vacancies reflects uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment,” the ONS said.

The report follows news from earlier this month showing that U.S. companies cut 102,943 jobs in January, a 444% increase from January 2022, according to employment service Challenger, Gray & Christmas.

“We’re now on the other side of the hiring frenzy of the pandemic years,” said Andrew Challenger, CGG’s senior vice president. “Companies are preparing for an economic slowdown, cutting workers and slowing hiring.”

Meanwhile, the ONS said growth in regular pay was 6.7% among employees in October to December 2022, the “strongest growth rate seen outside of the coronavirus (COVID-19) pandemic period” while total pay — including bonuses — was up 5.9%.

Adjusted for inflation, however, growth in total and regular pay fell by a respective 3.1% 2.5%, the ONS report said, noting that the drop was “smaller than the record fall in real total pay we saw in February to April 2009 (4.5%), but remains among the largest falls in growth since comparable records began in 2001.”

While inflation has hurt people on both sides of the Atlantic, recent research by PYMNTS finds some consumers optimistic that things will get better.

“New Reality Check: The Paycheck-to-Paycheck Report: The Economic Outlook And Sentiment Edition,” a PYMNTS and LendingClub collaboration, found that 40% expect their finances will improve this year, up 7 percentage points from the 33% recorded in July 2022.

Part of that comes from consumers who aren’t struggling to meet expenses already, 46% of whom anticipate that their income will keep up with inflation. Another 30% of that group say they expect their financial situation to improve overall in the same time frame.

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