By Aaior K. Comfort

The UK’s unemployment rate fell slightly to 4.0% in the three months ending in August, down from 4.1% in the previous period, according to data released by the Office for National Statistics (ONS) on Tuesday. Meanwhile, wage growth has slowed, marking a drop in average earnings for workers.

The ONS reported that annual growth in regular earnings slipped to 4.9%, the lowest level in over two years. This decline in wage growth, combined with easing unemployment figures, strengthens predictions that the Bank of England (BoE) will cut interest rates from 5.0% to 4.75% at its November meeting.

Ashley Webb, an economist at Capital Economics, highlighted that the report “adds further support to widespread expectations” for the rate cut.

In September, the BoE refrained from consecutive cuts to borrowing costs after it lowered its key rate in August for the first time since early 2020, bringing it down from 5.25%—a 16-year high—as inflation returned to normal levels.

The ONS is set to release the latest inflation reading on Wednesday, with analysts expecting it to fall below the BoE’s target of 2.0%.