Unemployment Rises in US and UK, Adding to Pressure to Cut Interest Rates – As it Happened

Time to wrap up…. on a day in which unemployment has risen on both sides of the Atlantic….

The US labor market grew by more than expected last month, recovering some of the damage inflicted by the federal government shutdown, according to official data.

An estimated 105,000 jobs were lost in October, and 64,000 were added in November, a highly-anticipated report showed on Tuesday.

Jobs growth was higher in November than anticipated by many economists, with a consensus forecast of some 40,000 jobs added.

But the headline unemployment rate continued to climb – and hit 4.6%, a four-year high, last month – amid apprehension around the strength of the US economy.

Several economists forecast that the weakness of the jobs market could prompt the Federal Reserve to cut interest rates more rapidly than it expects next year.

The rate of UK unemployment rose to a four-year high of 5.1% in the three months to October, as the labour market showed signs of further weakening before last month’s budget.

The Office for National Statistics said the jobless rate was the highest since January 2021 – but with the pandemic era stripped out, it was the highest since early 2016.

Analysts said the rise in the jobless rate made it almost certain that the Bank of England would cut interest rates when policymakers meet on Thursday.

The central bank has said it wanted wages growth to fall further before reducing the cost of borrowing again this year. The latest figures showed wage growth excluding bonuses fell to 4.6% in October, from 4.7% the previous month, the lowest since early 2022.

Young people in the UK have been hit particularly hard: the number of 18- to 24-year-olds out of work, at 546,000, is the highest since 2015 and up 85,000 on the quarter.

“Young people again find themselves at the heart of this downturn, just as they were in the wake of the financial crisis and Covid. Policymakers and employers need to redouble efforts to support them,” said Nye Cominetti, the principal economist at the Resolution Foundation thinktank.