UK Economy - Unemployment rate falls to lowest level since 1974

The UK unemployment rate has fallen to 3.6% of the labour force. This is the lowest recorded unemployment since 1974.

• But the figures also show that the UK employment rate fell
• In part this is because of an increase in economic inactivity
• There has been a rise in the number of people of working age choosing to leave the labour market for good
• Almost 650,000 workers from the economy has stopped searching for work since the start of the pandemic.
• So, the size of the UK labour force has shrunk which is bad news for economic growth and addressing labour shortages

For the moment the UK labour market continues to show resilience even though economic growth is faltering and there are serious risks of major job losses in the weeks and months ahead as businesses adjust to higher energy costs and consumers cut back on spending. The unemployment rate usually lags the economic cycle to a degree. Welcome as the 3.6% low for the unemployment rate is, if we peer behind the figures, we see that the employment rate dropped too driven by a rise in economic inactivity.