Britain’s unemployment rate unexpectedly edged up in the three months to December to mark a first rise in almost a year, underlining a message from the Bank of England that it is in no rush to hike borrowing costs.
The jobless rate edged up to 7.2 percent in the three months to December compared with 7.1 percent in November, the Office for National Statistics said on Wednesday.
That was the first rise since the three months to February 2013 and was higher than the unchanged reading forecast by economists in a Reuters poll.
But the number of claimants of jobless benefits - a narrower category than those who are deemed unemployed - fell for the 15th consecutive month, while wage growth accelerated.
That suggested a mixed picture for the labour market, adding weight to last week’s shift of emphasis by the central bank to a broader range of measures of slack in the economy when considering changes to monetary policy.
The BoE was forced last Wednesday to overhaul its previous forward guidance policy that hinged on a 7.0 percent unemployment rate threshold, a level almost reached in the three months to November.
It also said it was in no rush to hike rates.
The minutes from the BoE’s last meeting, also released this Wednesday, showed policymakers had no disagreements about major changes to the central bank’s forward guidance policy.
“(With) weaker inflation below target, the unemployment rate tantalisingly moving away from their threshold, it helps to take the pressure off the BoE for early rate increases,” said Brian Hilliard, economist at Societe Generale.
Sterling fell to a session low against the dollar and the euro while gilt futures extended gains after the data.
The ONS said the number of people claiming jobless benefits fell by 27,600 in January, compared with a forecast for a decline of 20,000 in a Reuters poll.
Wage growth has lagged inflation over the last years, and the squeeze on incomes is a key battleground of next year’s general election.
Average weekly earnings rose by 1.1 percent in the three months to December 2013 compared with the same period in 2012 - its highest since July last year, although still below the inflation rate.
Excluding bonuses, average weekly earnings rose by 1.0 percent by the same comparison.
The annual inflation rate was 1.9 percent in January - below the BoE’s target for the first time in over four years.