by Andy Bruce and David Milliken

LONDON (Reuters) – Britain’s jobs market showed further signs of slowing in the three months to July, but strong wage growth could prompt the Bank of England (BoE) to continue its monetary tightening cycle next month .

According to data released on Tuesday by the Office for National Statistics (ONS), Britain’s unemployment rate rose to 4.3% in the three months to July, from 4.2% a month earlier. This is the highest level in the three months to September 2021.

This unemployment rate is already higher than the 4.1% rate forecast by the BoE for the whole of the third quarter, when the central bank published its latest forecast at the beginning of August.

Employment contracted by a larger-than-expected 207,000 jobs in the three months to July, the biggest fall since the three months to October 2020, according to ONS data.

At the same time, however, wages continued to increase at a rapid pace and above the rate of inflation. According to many investors, this should push the BoE to raise interest rates again on September 22, although it is likely that this will be the final increase of the current cycle.

Over the three months to July, wages in Britain, excluding bonuses, increased by 7.8% year-on-year. This is the fastest rate since ONS records began in 2001, and is in line with the forecasts of economists polled by Reuters.

Wage growth, including bonuses, was higher than expected, 8.5% over the three months to July, compared to a consensus of 8.2%. Taking into account consumer price inflation, the increase was 0.6%, the first since March 2022.

“Wage growth remains high, partly reflecting exceptional payments to public sector workers, but for real wages to rise sustainably we must stick to our plan to halve inflation,” said the Minister of Finance, Jeremy Hunt.

The pound sterling did not react to the publication of these data and was stable at $1.25.

(Reporting Andy Bruce and David Milliken, Claude Chendjou, edited by Blandine Hénault)

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