The unchanged unemployment rate is an ‘encouraging sign’, says Chancellor Jeremy Hunt.

UK unemployment rate remains unchanged despite Britain’s economy flatlining, official figures show.

The Office for National Statistics (ONS) revealed that the UK unemployment rate was 3.7 per cent in the three months to December, the same rate as recorded in the three months to November.

Chancellor Jeremy Hunt released a statement, saying: “Unemployment near record lows in difficult times is an encouraging sign of resilience in our labor market.

“The only thing we can do to further boost people’s wages is to stick with the plan to halve inflation this year”.

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The 3.7 percent figure was slightly higher than in the previous calendar quarter, when the unemployment rate stood at 3.6 percent in the three months to September. Additionally, the number of job vacancies decreased, and the number of redundancies increased. This can now be fed through next quarter’s unemployment data.

The data also showed that regular pay growth was 6.7 percent in the three months to December, the strongest rate of growth seen outside the pandemic, the ONS said.

However, wages continue to rise as prices rise. Once consumer price index (CPI) inflation is taken into account, regular wages fell by 3.6% in the three months compared to the previous year.

The fall was smaller than the record fall of 4.1% seen in the three months to June, but still remains among the biggest falls in real pay since comparative records began in 2001, the ONS said.

In a sign of the labor market slowdown, the estimated number of vacancies fell by 76,000, the seventh straight decline.

This reflects the economic pressures and uncertainty that are still holding firms back from hiring, the ONS said.

Darren Morgan, director of economic statistics at the ONS, said: “Fewer people remained out of the labor market in the last quarter of 2022, with some people going straight back into employment and others starting to look for work again.

“This means that although employment has risen again, unemployment has also risen.

“While there is still a large gap between public and private sector income growth, it has narrowed somewhat in recent times. Overall, salaries, however, are being outpaced by rising prices.

“Although still at historically very high levels, job vacancies have fallen again, with particularly sharp declines from the smallest employers.

“The number of working days lost due to strikes increased sharply again in December. Transport and communication remained the most affected areas, but the health sector was a major contributor this month”.

Labour’s shadow chancellor, Rachel Reeves, said: “Britain has huge potential – but 13 years of Tories have driven real wages down, families worse off and our economy lagging behind on the world stage. The government needs to stop following this path of sitting back and managed decline.

“Labour will put people back to work with our real plans for growth to create good, new jobs in every part of our country”.

The Liberal Democrats blamed the Conservatives for cutting wages and “driving the economy to the brink of recession”.

The Resolution Foundation said new labor market data points to softer demand and increased supply for workers — declining vacancies in contrast with rising unemployment and a welcome increase in participation.

Nye Cominetti, senior economist at the Resolution Foundation, said: “The labor market is sending a tentative signal to policymakers, with early evidence of a cooling job market and excess labor supply as well as slowing wage growth.

“The decline in economic activity since the summer is welcome, although the accompanying increase in zero hours contracts is so low. And the bigger picture is a very real wage squeeze that is prompting more industrial action”.