UK unemployment shows surprise fall to 4.9% as pay growth drops to lowest in five years
Summary
UK unemployment fell to 4.9% in the three months to February, lower than expected. However, wage growth slowed and experts predict more job losses due to the Middle East conflict and economic challenges.Key Facts
- UK unemployment rate dropped from 5.2% in January to 4.9% in February.
- Wage growth, excluding bonuses, slowed to 3.6%, the lowest since November 2020.
- Private sector pay growth fell slightly from 3.3% to 3.2%, aligning with Bank of England inflation targets.
- The Bank of England will review employment and inflation data before deciding on interest rates on April 30.
- Iran war starting February 28 has not yet affected February jobs data, but March payrolls fell by 11,000 workers.
- Job vacancies are at their lowest level in nearly five years, but vacancies per unemployed person stay about the same.
- Economic forecasts expect unemployment to rise to 5.8% by mid-2027, with about 250,000 extra job losses linked to the Middle East crisis.
- The IMF recently lowered the UK’s growth forecast for 2026 from 1.3% to 0.8%, the biggest downgrade among G7 countries.
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