Companies are still struggling to find workers, the latest U.K. jobs data shows, with demand for labor not cooling off despite surging inflation and rising interest rates.
The U.K. unemployment rate fell by 0.3 percentage points to 3.5% in the three months ending August, the lowest rate since 1974.
The number of unemployed people per vacancy fell to a record low of 0.9, as the economic inactivity rate — the opposite of participation — matched the highest level in five years at 21.7% between June to August. The Office for National Statistics said the increase was driven by two age groups: those 50 to 64, and those 16 to 24, on account of record long-term sick, as well as increased students.
Pawel Adrjan, director of EMEA economic research at the recruiting firm Indeed, said the U.K. can get more people in the workforce by fixing the health system, increasing flexibility in jobs, better pay and immigration. Work visa issuance, he notes, has spiked over the last two years, but the annual rate of 330,000 is not much compared to the size of the U.K. labor force.
With the job market so tight, wages rose, to 6% year-over-year from 5.5%.
The jobs data warrants a 75 basis point hike the next time the Bank of England meets, according to Nomura economist George Buckley.