UK employment reaches a new record — as wages rise quicker than expected

source
Reuters/Suzanne Plunkett

  • UK unemployment rate stays at joint record low of 4.3%, while employment hits a record high, with 32.21 million people in work.
  • That represents an employment rate of 75.3%.
  • Average earnings increase by 2.4% excluding bonuses – remaining below inflation, but beating forecasts.

LONDON – The number of people employed in the UK has hit a fresh record, while wage growth continues to pick up, albeit slowly, according to the latest data from the Office of National Statistics.

The ONS said on Wednesday that there were “32.21 million people in work in the three months to November 2017.”

“Latest estimates from the Labour Force Survey show that there were 32.21 million people in work in the three months to November 2017, which is 415,000 more than for the same period a year earlier and 102,000 more than the previous quarter,” an ONS release said.

Overall, the employment rate was 75.3%, a joint high since records began in 1971.

Here is the ONS’ chart, showing the employment rate in its historical context:

Screen Shot 2018 01 24 at 09.41.15

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ONS

Average earnings beat forecasts, the ONS said, with earnings excluding bonuses increasing by 2.4% over the data period, while including bonuses, that figure was 2.5%. Both numbers were better than expected.

The UK’s Consumer Prices Index (CPI) inflation rate – the key measure of inflation – remains elevated since the referendum, hitting 3% in January.

That means that while earnings growth may be picking up, it is still lagging inflation and UK workers are seeing their real wages continuing to decline.

“With the employment rate returning to a joint record high and the number of vacancies setting a new record, demand for workers clearly remains strong. Moreover, economic inactivity is at its lowest since the winter of 2000-01,” David Freeman, a senior statistician for the ONS said in a statement.

“Nevertheless inflation remains higher than pay growth and so the real value of earnings continues to decline.”

The unemployment rate was 4.3% in the three months to November, unchanged from the previous reading.

Earlier in the month, Michael Saunders, a key Bank of England policymaker said that the UK could see unemployment fall below 4% in 2018, as the country’s job market continues to defy the uncertainty surrounding Britain’s economic future outside the EU.

“The view of the external consensus is that this decline in unemployment is now probably over, and that unemployment is likely to stabilise or rise slightly this year,” Saunders told a conference in London.

“But my hunch is that the labour market will probably tighten further this year, with the jobless rate dropping to — and perhaps even below — 4% during 2018, alongside further declines in under-employment.”