UK Unemployment Hits 7-Year Low; Wage Growth Lower Than Expected

Britain’s unemployment rate fell to the lowest since early 2008 and employment rose to a record in the third quarter, mirroring continued improvement in labor market conditions.

There were 31.21 million people in work, 177,000 more than for the April-to-June quarter and 419,000 more than in the same period a year earlier.

Earnings including bonuses increased by a less-than-expected 3 percent and that excluding bonuses grew 2.5 percent.

It is also more than 400,000 more than in the same period a year ago. “We can not rest. We have over 700,000 job vacancies showing we have an opportunity to help unemployed people back into work”. Unemployment slipped to 5.3%, the lowest rate since mid-2008, before the collapse of Lehman Brothers triggered a global recession.

Wages increased by 2.5 per cent in year to September, to stand at an average £463 a week before tax, according to the Office for National Statistics.

The number of people claiming unemployment benefits increased by 3,300 from September, which was more than the expected rise of 2,700.

Martin Beck, advisor to the EY ITEM Club, said: ‘Despite a tighter labour market, headline growth in total average earnings held steady at 3 per cent in September.

This pushed up Britain’s working age employment rate to 73.7pc and means Britain now has the highest employment rate and level since records began in 1971.

Nick Palmer, a statistician at the ONS, said Wednesday’s figures formed part of a “recent strengthening trend in the labour market”.

“Ex bonuses, annual growth fell from 2.6% to 1.9% – well below the rate consistent with meeting the inflation target”.

Matt Whittaker, chief economist at the Resolution Foundation think tank, said: “It is encouraging to see employment rising again after a bumpy few months”. “That will be good news”.

“Despite the positive jobs figures, there is still plenty of scope for further growth. British businesses need stability, supported by low interest rates for the medium term”.

Threadneedle Street is keeping a close eye on wage growth as it mulls its first rate hike since 2007, although Governor Mark Carney signalled last week that rates may not rise until the end of next year or even 2017.