UK unemployment rate falls to 4.9% and wages grow more than expected

Unemployment fell and wages increased in April, official figures showed, putting pressure on the Bank of England to raise interest rates despite a peace deal in the Middle East.

The latest figures from the Office for National Statistics (ONS) showed unemployment slipped to 4.9% in the three months to April from 5% in the three months to March.

Average wages excluding bonuses remained the same at 3.4%, but climbed from 4.1% to 4.4% once bonuses were included, the ONS said. The unemployment rate was lower, and wage growth stronger, than economists had forecast.

Annual average regular earnings growth was 4.8% for the public sector, and 3% for the private sector.

The Bank of England governor, Andrew Bailey, has cited strong public sector pay as a concern for its monetary policy committee, which is expected to hold rates at 3.75% later on Thursday.

Employers were less likely to take on permanent full-time staff than they were earlier in the year in response to the war in the Middle East, which has shaken business and consumer confidence.

Fears have grown in recent months that employers will lay off staff to cope with rising costs from the war in Iran.

Recent surveys have shown that employers were turning their back on hiring permanent and making redundancies on a larger scale, as the Iran war created uncertainty over the economic outlook.

A fall in oil prices in recent days, linked to hopes for a peace deal between the US and Iran, could feed through into lower energy bills for businesses, easing cost pressures on them.

The ONS figures also showed vacancies slumped to their lowest level in more than five years as firms continued to rein in their hiring, falling by 19,000 to 707,000 in the three months to May, which was the lowest since the three months to April 2021.

The work and pensions secretary, Pat McFadden, said: “This month’s figures show that there are 400,000 more people in work than this time last year, but we know ongoing instability in the Middle East is causing uncertainty in our labour market.

“We have the right economic plan for growth and stability in a volatile world – and we are taking action to create opportunity and make sure that no one is left behind.”