British unemployment increased for the first time in seven months and pay growth slowed unexpectedly in the three months to February, official data showed Wednesday.
Data from the Office for National Statistics showed that the number of people out of work increased 21,000 to 1.7 million in the three months to February, the first increase in seven months. Employment climbed at a slower pace of 20,000.
Nonetheless, the jobless rate held steady at a decade low 5.1 percent, unchanged from the previous three months and matched economists' expectations.
The employment rate was 74.1 percent, the joint highest since comparable records began in 1971.
Average earnings including bonuses increased 1.8 percent, slower than the 2.1 percent increase in the previous three months and the expected growth of 2.3 percent.
Excluding bonuses, earnings climbed 2.2 percent compared with a year earlier, data showed.
In March, the claimant count remained unchanged at 2.1 percent as expected by economists. At the same time, the number of people claiming jobseekers' allowances increased 6,700, confounding expectations for a decline of 10,000.
The very disappointing combination of a rise in unemployment and marked fall in headline earnings growth may well fuel belief that the Bank of England's eventual next move could well be to cut interest rates, IHS Global Insight Economist Howard Archer said.
Scott Bowman, an economist at Capital Economics, noted that this slowdown in employment growth and rise in unemployment might suggest that the "Brexit" uncertainty is starting to weigh on hiring.
Hiring intentions have weakened in recent months, but the high level of job vacancies suggests that the slowdown also reflects firms struggling to find suitable labor, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said.
A high proportion of the unemployed have been without work for more than a year, he noted. Even if the U.K. votes to remain in the E.U., employment growth is unlikely to return to its former strength, Tombs added.
The Agents' summary of business conditions published by the Bank of England showed that employment intentions were little changed from March and remained consistent with muted employment growth.
Labor cost growth had remained moderate overall and had eased a little in manufacturing, reflecting the recent weakness in demand growth.
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