UK unemployment rises to 4.2 per cent as jobs market cools

BRITISH unemployment has risen as wage growth has eased, official data showed Tuesday, leaving the door open for an interest rate cut according to analysts.

The UK unemployment rate rose to 4.2 per cent in the three months to the end of February, up from 3.9 per cent in the three months to January, the Office for National Statistics (ONS) said in a statement.

"We are now seeing tentative signs that the jobs market is beginning to cool," said Liz McKeown, ONS director of economic statistics.

There were 1.4 million unemployed people in the UK between December and February, it said.

The inactivity rate, those not in work or looking for employment, also increased in February as workers continued to quit due to ill-health.

The ONS added that average regular pay growth, excluding bonuses, dipped to 6.0 per cent from 6.1 per cent.

However, taking into account Britain's annual inflation rate during the period, real wages rose by only 2.1 per cent.

"Easing pressure in the labour market keeps the Bank of England on track for a summer rate cut," commented Yael Selfin, chief economist at KPMG UK.

"The slight easing in regular pay growth will bring some comfort for the BoE which has relied on the pay data as a key gauge of domestic inflationary pressure.

"Moreover, the rise in unemployment rate paints a picture of a less tight labour market."

The Bank of England in March held its key interest rate at a 16-year high of 5.25 per cent, as overall UK inflation remains stubbornly above its 2.0-per cent target.

Inflation fell to a near two-and-a-half-year low of 3.4 per cent in February, easing the nation's cost-of-living crisis. (Agencies)