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UK labour market running hot - but is that strength or underlying ill-health?

The employment rate in the UK reached 75% in the three months to February 2024, which is up slightly on the previous quarter.

Unemployment came in at 3.8%, versus 4.2% in the three months to November and market expectations of 4.0%. Annual wage growth came in at 5.8%, versus 6.7% in the three months to November and market expectations of 5.6%.

Nicholas Hyett, investment manager at Wealth Club, commented on the figures: “With unemployment a touch lower than expected and annual wage growth a touch higher, the UK labour market is proving stronger than economists had expected. However, the high temperature of the UK labour market could be down to ill-health rather than a sign of peak physical fitness. 

“A growing proportion of the UK workforce, more than one in five, is economically inactive, with an historically high number signed off long-term sick. A shrinking workforce is increasing demand for those workers who are available and pushing up wages. Good news for those in work, but not so positive for the economy as a whole. Improving our national health is likely to become an increasing focus as we go through this election year.”

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