MARKET & ECONOMICSUK unemployment rate falls unexpectedly but wage growth

The unemployment rate dipped to 5.2% in the three months to October, from 5.3% in the three months to September, the Office for National Statistics said.

“The employment rate is at its highest ever level, the unemployment rate is down to its lowest since well before the crash at 5.2%, and youth unemployment – always a tricky problem to solve – continues to fall impressively”.

Workers’ pay in Britain grew at a slower than expected pace in the three months to October, suggesting the Bank of England will take even longer to raise interest rates from the record low in place for almost seven years.

The ONS figures show that between August and October 2015, the proportion of people aged 16-64 in work in the United Kingdom rose to the highest level since comparable records began in 1971.

“The economy is robust, jobs growth is strong, but there is no wage inflation”, Alan Clarke, an economist at Scotiabank, told clients. The Federal Reserve, by contrast, is expected to lift its key interest rate on Wednesday.

“Given the importance that the MPC are clearly now placing on earnings growth, the labour market data are likely to dilute expectations of a Bank of England interest rate hike on the first half of 2016”.

Total hours worked per week topped one billion in the latest quarter, the first time it has passed this mark. In the month of October alone, regular wages rose by 1.7%, the slowest increase since January. “Our plan for a more prosperous future is delivering for working people with pay packets growing, and the new National Living Wage will deliver a further boost next year”.

If productivity improves, that will allow companies to increase wages without generating inflationary pressures.

Financial-data firm Markit reported signs of faster growth from Germany, although its survey signalled only modest expansion of 0.4% across the single-currency bloc overall in the final three months of the year.

Averages earnings rose by at an annual rate of just 2 per cent, down markedly from the 2.4 per cent seen in the previous quarter.

“We now that a lot of employers are recruiting online nowadays so we want to make sure our customers are in a position to compete in the jobs market”, he said. This is the trend we saw throughout 2015.

“While the directors get a whopping wage increase, a lot of the workers get nothing at all”.