UK unemployment rises to 3.8, highest since Q2 2022
Wage growth beats all forecasts at 5.9 in 3 months to Feb
Realterms fall in pay one of the biggest on record
Markets increase bets on another BoE rate rise in May

LONDON, April 18 Reuters British wages rose faster than anticipated last month, in a move that economists judge may tip the Bank of England towards a further rise in interest rates next month, despite an unexpected increase in joblessness too.

The Office for National Statistics ONS said the unemployment rate edged up to 3.8 its highest since the second quarter of 2022 rather than holding at 3.7, as forecast by economists in a Reuters poll.

Annual pay growth for the three months to January was revised up to 5.9 and held at that level for the three months to February above all forecasts in the Reuters poll, which had pointed to a drop to 5.1. Excluding bonuses, wage growth held at 6.6.

Sterling strengthened and government bond yields rose to a onemonth high after the data, as financial markets saw a more than 80 chance of the Bank of England BoE raising interest rates to 4.5 in May to help bring down inflation, which was above 10 in February.

For those of us expecting the Bank of England to keep interest rates unchanged next month, the latest surprise pickup in UK wage growth undoubtedly puts a spanner in the works, said James Smith, economist at ING.

High inflation meant that in real terms, average earnings in the three months to February were 4.1…