UK Unemployment Falls – Another Layer In The Sticky Economic Jam Sandwich

Published on
  • The UK unemployment rate was estimated at 4.3%, 0.3 percentage points higher than before the pandemic, but 0.5 percentage points lower than the previous quarter.
  • The UK economic inactivity rate was estimated at 21.1%, 0.9 percentage points higher than before the pandemic, but largely unchanged on the quarter.

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q3 2021 hedge fund letters, conferences and more

Unemployment Figures Fall

"The latest unemployment figures are another layer in the economic jam sandwich, indicating that higher prices may prove a lot stickier than first thought.

Fears that a big chunk of furloughed staff would lose their positions led to the Bank of England holding off an interest rate rise at the last meeting.

But the jobs queues are getting shorter, as the big fight for staff continues, with the unemployment rate coming in at 4.3%, a notch lower than forecast.

The governor of the Bank of England Andrew Bailey says he’s uneasy about rising inflation and the jobs figures are another indicator that there could be a fresh sugar rush of higher wages. Already starting salaries this Autumn are at their highest rate in 24 years but Mr Bailey still appears steadfast in this view that sweeteners for staff will be temporary and that we won’t be returning to the wage spiral of the 1970s.

But the layers are building up for a sustained increase in prices in the medium term. The supply chain crisis has already spread across the globe, pushing up costs for companies and shows little sign of easing just yet. The pandemic bounce back has buttered up demand for goods, and now potential has grown for higher wages to congeal.  The official Labour Force Survey won’t be released until the 16th of December but if the jam sandwich of sticky prices shows little sign of easing, it looks increasingly likely the Bank will raise rates at its meeting two days later."

Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown

About Hargreaves Lansdown

Over 1.67 million clients trust us with £138.0 billion (as at 30 September 2021), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.