Unemployment edges up again in a sign that higher interest rates may be biting

ITV News Business and Economics Editor Joel Hills reports on the unexpected rise of the unemployment rate

The first thing to say is the headline rate of unemployment, while historically low, has crept up again.

More strikingly, the number of people on company payrolls fell in April by a chunky amount and for the first time in two years.

This on the day that Vodafone has announced 11,000 jobs losses worldwide, some of which will affect its business in the UK.

All of this is interesting in the context of higher interest rates. 

Normally, when Bank Rate rises sharply, the housing market is the canary in the coal mine, then over time the labour markets starts to change.

House prices began falling in the UK several months ago. This may be the first signs of higher interests being felt more widely across the economy.

In fairness, it’s probably a little soon to be certain.

In the first three months of this year the level of unemployment rose but so too did the level of employment.

That’s because there was a record flow of mainly younger men out of inactivity and into work. 

Good news, although the workforce remains smaller than it was before the pandemic and there are almost 2.6 million people who are long-term sick - a record high.

Finally, and to the surprise of absolutely no one, the squeeze on living standards continued in March.

Regular pay - adjusted for inflation - fell by 2% for a seventeenth consecutive month. 

Also in March, Citizens Advice referred a record number of people to food banks and more than 500,000 working days were lost to strike action. Cause and effect.

The chancellor, when I interviewed him last week in Japan, refused to say when he thinks we’ll start feeling better off again. 

Jeremy Hunt shopping in Tokyo ahead of the G7 summit. Credit: HM Treasury

This morning (on Tuesday), Jeremy Hunt said:  “Encouraging that the unemployment rate remains historically low but difficulty finding staff and rising prices is a worry for many families and businesses. 

"That's why we must stick to our plan to halve inflation and help families with the cost of living, while delivering our childcare reforms and supporting older people and disabled people who want to work."

Demand for labour appears to be cooling but the economy is still awash with one million vacancies. 

And wage growth, while not high enough to prevent living standards from falling, is high enough to worry a central banker.

The markets are still betting on another interest rate rise later in the summer.

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