U.K. unemployment was unchanged in the three months through July, with the labor market showing continued signs of softness ahead of a Bank of England meeting this week.
The unemployment rate was 4.9%, unchanged from the three months through June, according to data released Tuesday by the Office for National Statistics. This was in line with a consensus of economists polled by The Wall Street Journal, and remains close to a five-year high.
The number of payrolled employees continued to fall, particularly in the retail and hospitality sectors, while vacancies remain at their lowest level outside the pandemic period for more than a decade, the ONS said.
With the U.K. continuing to face considerable economic uncertainty, employers have preferred to wait and see before committing to further hiring, said Yael Selfin, an economist at KPMG U.K.
"People just don't want to hire," she said. "Uncertainty means vacancies are low. They were waiting to see before engaging."
Annual wage growth, excluding bonuses, came in at 3.5%, in line with the prior period and economists' views, the data showed.
The figures come ahead of the Bank of England's interest-rate decision Thursday, with the central bank widely expected to leave its key rate at 3.75%, although markets are increasingly pricing in the possibility of a rate increase ahead as inflation risks have risen.
Inflation data for August, due Wednesday, is expected to show annual price growth rising above 3% compared with 2.9% in July, driven by energy prices as the war in Iran drags on.
Still, core inflation is seen stable at 2.6%, with few signs that higher energy prices are feeding through to other areas of the economy. Alongside stable wage growth, core inflation data could rein in expectations for rate hikes going forward.
"The labor market remains too weak for wage growth to follow consumer prices higher," said Andrew Wishart, an economist at Berenberg.
"As a result, we think that the BOE only has to hike once rather than four times as investors currently predict," he said.