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UK Unemployment Rises; Employment Falls Most Since 2015

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The UK labor market weakened as the number of people out of work increased and employment declined the most in over four years in three months to August, data from the Office for National Statistics showed Tuesday.

The level of unemployment increased by 22,000 to 1.31 million in three months to August and the number of people in work fell 56,000 to 32.69 million.

The jobless rate rose to 3.9 percent, while it was expected to remain unchanged at a 44-year low of 3.8 percent. The employment rate came in at 75.9 percent, down from 76.1 percent in the previous quarter.

Data showed that average earnings which includes bonuses, grew 3.8 percent in the year to August, weaker than the expected 4 percent increase. Earnings excluding bonuses, also advanced 3.8 percent annually.

In July to September, the number of vacancies decreased 11,000 from previous quarter to 813,000, the lowest since 2017.

In September, the claimant count rate held steady at seasonally adjusted 3.3 percent. The number of people claiming unemployment benefits increased by 21,100 from the previous month.

The softening in the labor market is probably partly due to weak economic growth reducing demand for labor, Thomas Pugh, an economist at Capital Economics, said. But the natural ebb and flow of the data is probably also playing a part, the economist noted.

As the unemployment rate is still low and wage growth remains much higher than in recent years, the labor market will still provide solid support to the consumer sector over the next few years, Pugh added.

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