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UK unemployment edges up but pay growth beats forecasts

The Office for National Statistics said the unemployment rate rose to 3.8% – its highest since the second quarter of 2022 – rather than holding at 3.7%, as forecast by economists in a Reuters poll.

Annual pay growth for the three months to January was revised up to 5.9% and held at that level for the three months to February – well above the forecast of 5.1% in the Reuters poll. Excluding bonuses, wage growth held at 6.6%.

“Pay continues to grow more slowly than prices, so earnings are still falling in real terms, although the gap between public and private sector earnings growth continues to narrow,” ONS statistician Darren Morgan said.

British consumer price inflation hit its highest in more than 40 years at 11.1% in October, and was still in double digits in February.

The BoE has forecast that inflation will fall below 4% by the end of the year as wholesale energy prices fall, but financial markets see an 80% chance that it will raise borrowing…
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