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Data from the Office for National Statistics (ONS) released this morning shows lower than expected unemployment despite the end of the furlough scheme in September. The number of payrolled workers surged by 160,000 or 0.6 percent between September and October to 29.3 million.
The ONS said numbers were now “well above” levels seen before the pandemic struck, up 235,000 since February 2020.
The unemployment rate fell to 4.3 percent.
Yesterday Bank of England Governor Andrew Bailey said the bank’s Monetary Policy Committee (MPC) partially decided against an increase in interest rate in November due to uncertainty over unemployment.
He said: “For me the question was, do we wait six weeks, until the next meeting.
READ MORE: Jobs market booms back despite end of furlough
“Bearing in mind we’ll start to see the picture by then,” he told MPs on the Treasury committee when speaking about the lack of official data on the impact of the end of the furlough scheme.
“I felt that on balance for me there was something to be said for waiting to see this evidence on the labour market from the official data which we will start to get tomorrow, interestingly.”
Now that the ONS data has been published, independent economist Julian Jessop told Express.co.uk there was an increased likelihood of a rise in rates when the MPC next meets in December.
He said: “Reassuring jobs data boost the case for December rate hike.
“This morning’s reassuring UK jobs data provide further support for the decision to end the furlough scheme, while strengthening the case for the Bank of England to raise interest rates in December.
“The Bank of England MPC’s decision to duck the opportunity to raise rates in November was largely explained by uncertainty about the labour market and the end of furlough.
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“Today’s data should have removed a lot of the remaining doubts and the next set of jobs figures – released just before the December MPC meeting – should end them completely.”
The Treasury has set the Bank the target of keeping inflation at two percent, however, it is currently as high as 4.5 percent and is forecast to increase up to six percent next spring.
Tomorrow the latest information of CPI inflation will be published, and will give further insight into how high prices are rising.
Mr Jessop added: “Confirmation in tomorrow’s CPI data that inflation is rising further above target could seal the deal.”
The MPC voted earlier this month to keep interest rates at record lows of 0.1 percent.
Just two members of the nine-strong committee were in favour of raising rates to 0.25 percent.
Mr Bailey said while he had decided against a change to rates earlier this month, he felt “very uneasy about the inflation situation” and signalled rises would come soon.
“It will be necessary over coming months to increase Bank Rate in order to return CPI (Consumer Prices Index) inflation sustainably to the two percent target,” he said after the last MPC meeting.
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