A bigger-than-expected decline in jobless claims as well as a fall in unemployment indicate that the U.K. economy is recovering as suggested by recent economic data.
The number of people claiming unemployment benefits decreased by 8,600 in May from April, the Office for National Statistics reported Wednesday. It was sharper than the expected drop of 5,000.
The claimant count totaled 1.51 million in May, while the rate remained unchanged at 4.5 percent as expected by economists.
Looking ahead, Vicky Redwood at Capital Economics said the labor market tends to be a relatively lagging indicator, so there could be further improvement in jobs growth in the coming months as the recent pick-up in economic activity feeds through.
The number of unemployed decreased by 5,000 in the three months through April to 2.51 million, leaving the jobless rate at 7.8 percent of the economically active population. The rate also matched economists' expectations.
At the same time, there were 29.76 million people in employment, up 24,000 from the November to January period.
However, as the employment generation in the private sector may not be enough to offset job cuts in the public sector, unemployment could edge up gradually to stand around 2.65 million in early 2014, IHS Global Insight's Chief U.K. Economist Howard Archer said.
According to the Report on Jobs published by the Recruitment and Employment Confederation and KPMG, permanent job placements rose to a six-month high, while the availability of candidates to fill permanent job vacancies declined in May.
ONS data today showed that average earnings improved in the three months through April, but it is still well below the inflation rate and constrain consumer spending.
Including bonus, average weekly earnings gained 1.3 percent from a year ago, much faster than the expected 0.2 percent increase. Excluding bonus payments, it rose by 0.9 percent comparing February to April with the same period a year earlier.
The increase in total pay reflects bonus payment by some businesses in April this year, which was paid last year in March.
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Forex News
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.