Unemployment rate may be much lower than estimated, official figures show
The UK’s jobless rate may have been much lower than estimates suggested at the end of last year, according to data that could bolster pressure on the Bank of England to hold off on interest rate cuts.
The Office for National Statistics (ONS) said new experimental results from its Labour Force Survey, which is used to determine the official unemployment rate, showed a rate of 3.9% for the three months to November.
It had previously been measured at 4.2%.
The update, which was based on new population estimates, continued to come with a big health warning as ONS number-crunchers move to bolster the quality of the data.
It expected that work to be completed by September.
The survey, which has suffered from low participation rates since the pandemic, is also used to determine other figures such as wage increases – also crucial pieces of information for the Bank of England in the current economic environment.
Policymakers in Threadneedle Street are currently weighing the timing of interest rate cuts following progress in the battle against inflation.
Financial markets currently expect borrowing costs to start to fall back from May.
Read more:
Bank of England governor sees next rate move as a cut
The signs point to interest rate cuts within months – here’s why
Please use Chrome browser for a more accessible video player
Fresh hopes for the UK economy?
While a lower unemployment rate is good news on the face of it, it will only fuel worries among rate-setters at the Bank of about inflationary risks ahead.
The Bank is anxious to limit demand in the economy – helping to keep a lid on the pace of price growth.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the outlook for employment was weaker than the ONS figures indicated.
“More recent evidence suggests that unemployment has begun to rise at a faster pace,” he wrote.
“For instance, the number of redundancy notifications received by the Insolvency Service in the four weeks to January 21 was 17% higher than in the same period a year ago.
“In addition, our seasonally adjusted measure of the number of Google searches for phrases including “redundancy”-a good leading indicator for the official measure of layoffs-exceeded its average level in the second average by 24% in January and its 2015-to-19 average by 28%.
“Accordingly, we still think that the MPC likely will reduce Bank Rate to 4.50% by the end of this year, from 5.25%, with the first step down coming in May, though the risks that the initial cut comes later are rising.”
A trio of property giants has lodged a protest against a radical financial restructuring that will see Cineworld imposing steep rent cuts on its landlords.
Sky News has learnt that British Land, Landsec and Legal & General Investment Management all voted against the cinema operator’s restructuring plan this week.
Cineworld has confirmed plans to close six of its UK multiplexes, but documents circulated to creditors show almost 50 others are in categories requiring landlords to agree to revised rent deals in order to ensure their long-term viability.
Although they carry significant influence in the commercial property sector, the trio’s protest will have no impact on the outcome of the company’s proposals, since its owners are now also among its largest creditors, meaning they can effectively force the deal through.
According to documents sent to creditors during the summer, 33 sites – categorised as Class B – “require a reduction of rent to ERV [Estimated Rental Value] Rent in order to place the sites on a viable long-term footing”.
A further 38 of Cineworld’s cinemas would be unaffected, while another 16 Class C1 and C2 leases require reductions to either turnover rent or zero rent in order to render them financially viable.
The documents added that the company did not have sufficient funding to meet a quarterly rent bill on June 24 of £15.9m.
“The UK group did not have sufficient liquidity to make the June 2024 Rent Payment and required further funding from the US Group to meet this liquidity need.
“Absent this funding, the UK Group would have been insolvent on a cashflow basis.”
Cineworld is being advised by AlixPartners.
Keep up with all the latest news from the UK and around the world by following Sky News
Other cinema operators are now poised to step in to take over some of Cineworld’s sites.
The company trades from more than 100 locations in Britain, including at the Picturehouse chain, and employs thousands of people.
Cineworld grew under the leadership of the Greidinger family into a global giant of the industry, acquiring chains including Regal in the US in 2018 and the British company of the same name four years earlier.
Its multibillion-dollar debt mountain led it into crisis, though, and forced the company into Chapter 11 bankruptcy protection in 2022.
It delisted from the London Stock Exchange last August, having seen its share price collapse amid fears for its survival.
Cineworld also operates in central and Eastern Europe, Israel and the US.
A long-running measure of consumer confidence has slumped to levels last seen at the start of the year following warnings of “tough choices” ahead in the looming budget.
GfK’s Consumer Confidence Index fell seven points in September to minus 20, with significant drops in predictions for personal finances and the general economy over the coming year.
The report’s authors suggested it was “not encouraging news” for the new government, which has made growing the economy its top priority.
Money latest: Millions already buying mince pies ahead of Christmas
But within weeks of taking the post of chancellor, Rachel Reeves – followed by prime minister Sir Keir Starmer – moved to warn of a legacy £22bn “black hole” in the public finances and said it would result in a painful budget on 30 October.
Among measures already taken include cuts to winter fuel payments, leaving up to 10 million pensioners up to £300 worse off, and inflation-busting public sector pay settlements.
Tax rises and spending cuts are widely expected in next month’s statement to MPs though The Times reported on Friday that a decision by the Bank of England to slow a programme of loss-making bond sales would leave Ms Reeves £10bn better off than she had anticipated.
It added that she was still expected to push forward with her budget plans anyway as a signal of her commitment to fiscal discipline.
Please use Chrome browser for a more accessible video player
Chancellor: ‘One budget not enough’
The latest snapshot on the public finances, released by the Office for National Statistics (ONS) on Friday showed net borrowing of £13.7bn during August.
Its chief economist, Grant Fitzner, said: “Borrowing was up by over £3bn last month on 2023’s figure, and was the third highest August borrowing on record.
“Central government tax receipts grew strongly, but this was outweighed by higher expenditure, largely driven by benefits uprating and higher spending on public services due to increased running costs and pay.”
Consumer spending accounts for around 60% of the UK economy.
Keep up with all the latest news from the UK and around the world by following Sky News
Data released separately on Friday showed a 1% rise in retail sales volumes during August in the wake of weakness, mostly blamed on poor weather, over the previous couple of months.
The ONS said that the increase was driven by supermarket sales, as demand for BBQ food and drinks rose due to the arrival of some sunshine over the key holiday month.
Please use Chrome browser for a more accessible video player
UK economy flatlines again
It also credited discounting by clothing retailers.
The data chimes with the latest updates from big retailers, including Next and B&Q’s owner, which have spoken of weak demand for so-called big ticket items such as home furnishings and kitchens respectively.
GfK’s closely-watched survey showed expectations for the general economy over the next 12 months fell by 12 points to -27, while the forecast for personal finances was down nine points to -3.
Read more:
Winter fuel payments – are you still eligible?
Which tax rises could Labour introduce at the budget?
Commenting on its key measures, including the headline figure, consumer insights director at GfK Neil Bellamy said: “These three measures are key forward-looking indicators so despite stable inflation and the prospect of further cuts in the base interest rate, this is not encouraging news for the UK’s new government.”
He added: “Strong consumer confidence matters because it underpins economic growth and is a significant driver of shoppers’ willingness to spend.
“Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the budget decisions on October 30.”
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports6 months agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports11 months agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Environment1 year agoTesla advances Powerwall pilot project with German electric company