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What should the Governor of the Bank of England take from the latest unemployment figure?

Journalist: Jon King, Daily Express Online

ended 24. October 2023

Britain's jobless rate remained unchanged in the latest quarter amid mounting signs the UK's jobs market has cooled.

Estimates from the Office for National Statistics reveal the unemployment rate for those aged 16 and over was 4.2% in the three months to August, the same as in the previous three months.

It comes after official figures last week revealed that real earnings are outstripping inflation for the first time in nearly two years.

With another interest rate decision due soon, the Daily Express is looking for strong views of three to four paragraphs about what Andrew Bailey should take from the latest unemployment figures? 

8 responses from the Newspage community

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Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
The MPC should sit on their hands, do nothing and vote to keep the rate changes on hold. Anyone expecting any rate cuts in 2023 will be disappointed but it will send the message to the market that they will react to economic data which shows the economy deteriorating.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Unemployment remains in steady decline which is not good news, but is when it comes to interest rates. With the jobs market slowing down, there will be less money sloshing around the economy and therefore less spending. A continued increase in unemployment will help suppress the stubborn inflation figures and relieve pressure on the monetary policy committee to press on with further base rate rises. October inflation figures will be critical. If inflation continues to stagnate, rates will have to push on to tip inflation on a downward trajectory once again.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
With Inflation and unemployment stagnant and wages increasing the Bank of England will feel that another nudge of a 0.25% increase is needed to re-start downward momentum on inflation.

This however would be idiotic as the effects of many of the previous rate increases are still yet to be fully felt. So many businesses are on their knees asking for mercy and reprieve, and the housing market is in a Bank of England-induced coma awaiting a needed adrenaline shot and there is the Middle-East conflict and oil prices also impacting the economy.

The Bank of England needs to hold the base rate, allowing the previous rises to make their impacts without landing another hammer blow forcing the UK into a deep recession.

But anyone betting on mercy or logic from the Bank of England is not getting good odds based on recent form. Sadly the UK economy is all-in and the wheel is spinning.
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Justin Moy
Managing Director at EHF Mortgages
This is definitly the time for the Bank of England to hold their nerve and keep rates where they are for the moment. Whilst unemployment numbers are uncomfortable for those affected, its realtively good news for borrowers, and with significant numbers of borrowers falling off cheap rates in Q4, we may not see reductions but holding base rate at 5.25% is a strong signal to the markets we are on the right pathway.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
Recent figures indicate that real earnings are outstripping inflation for the first time in nearly two years. Workers are finally experiencing a boost in their purchasing power, which effectively means we are nearing the peak of the inflation curve. Pay growth easing and a drop in job vacancies is an indicator of businesses becoming more cautious amid ongoing economic uncertainties and the possibility of more interest rate hikes. That is precisely what the MPC would have hoped for during the last 14 successive rate hikes. It is worth noting that the ONS has used real-time payroll data to provide a more comprehensive view of the labour market, improving the accuracy and reliability of this data. Now is the time for the BoE to ease the pressure. The stability in the jobless rate, coupled with increased real earnings evidences the resilience of our UK workforce. The smart money currently is now on the interest rate trajectory to gradually trend downwards over the next two MPC meetings.
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Graham Cox
Director at Bridging Hub
With so many interest rate rises over the past year, and the full effects of them yet to take effect, the Bank of England needs to hold its nerve and leave the base rate unchanged. Another rise now would further reduce already fragile business confidence, deter investment, and make a bad situation even worse. However I fear that having been late to the party in raising rates, Andrew Bailey may go too far and strangle the economy unnecessarily.

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Rhys Schofield
Brand Director at Peak Mortgages and Protection
These figures point to how weak and wobbly the economy and country is overall.

The interest rate hikes of the last 2 years are really starting to feed through now as more customers roll off fixed rate deals and face hundreds of pounds more a month in repayments. From the coal face of helping customers with their mortgages more rate rises don't appear to be needed as previous rises are doing the job. Piling more pain on top would be pointless.

With no new ideas in the pipeline to address the cost of living crisis, just a bit of stability through to a 2024 election would be ideal until we get a clear sense of direction on where we as a country are heading.
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David Robinson
Co-Founder at Wildcat Law
Like a roller coaster ride that has been slowly climbing to the top, we are now at the teetering point! We are hearing from a number of larger employers who are exploring cost-cutting measures, especially job cuts.
A combination of slowing income and increased employee costs are equalling a precipice that is not far off. When you combine that with the increased costs of borrowing due to interest rate rises even those businesses that might be looking to grow are hesitant. The traditionally pro-business party needs to come up with some business-friendly policies and fast or they risk the by-election results being repeated across the country in a general election. Starmer's Labour party is looking reassuringly boring at the moment for many.