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UK unemployment rate drops to 3.8%

The rate of UK unemployment fell to 3.8 per cent in the three months to December, latest Office for National Statistics (ONS) have revealed.

It marks a drop from the 3.9 per cent rate in the previous three months, and the lowest level since the period between November 2022 and January 2023.

ONS figures published on Tuesday also revealed average regular earnings growth eased back to 6.2 per cent in the three months to December and lifted 1.9 per cent after taking Consumer Prices Index (CPI) inflation into account.

That’s down from an upwardly revised 6.7 per cent in the three months to November, marking the slowest wage growth (excluding bonuses) in over a year, since the three months to October 2022.

But with CPI inflation taken into account, the 1.9 per cent hike in real regular pay is a high since summer 2019, excluding the Covid pandemic-skewed years.

Chancellor Jeremy Hunt said that unemployment remaining low and real wages being “on the up for the sixth month in a row” was “good news”, but that “the job isn’t done”.

He added: “Our tax cuts are part of a plan to get people back to work so we can grow the economy – but we must stick with it.”

Vacancies also fell for the 19th straight month, down 26,000 to 932,000 in the three months to January.

On Tuesday’s figures, ONS director of economic statistics Liz McKeown said: “It is clear that growth in employment has slowed over the past year.

“Over the same period the proportion of people neither working nor looking for work has risen, with historically high numbers of people saying they are long-term sick.

“Job vacancies fell again, for the 19th consecutive month. However, there are signs this trend may now be slowing.

“In cash terms, earnings are growing more slowly than in recent months, but in real terms they remain positive, thanks to falling inflation.”

It comes with inflation in the year to January expected to have risen to 4.1 per cent.

The CPI measure of inflation rose to 4 per cent in December, and forecasters estimated it would likely go up once again in figures to be released on Wednesday, to more than double the Bank of England’s target of 2 per cent.

This is a breaking news story and is being updated.

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