U.K. Employment Falls as Brexit Strains Spread to Labor Market

(Bloomberg) -- Cracks are opening in the U.K. labor market amid the escalating Brexit crisis, with the economy shedding jobs over the summer for the first time in two years and vacancies continuing to decline.

The signs of strain raise worrying questions about an area of the economy that has defied the turmoil since the 2016 vote to leave the European Union and helped to power consumer spending.

Unemployment unexpectedly rose from a four-decade low and wage growth eased, the Office for National Statistics said Tuesday. Meanwhile, the number of people in work declined the first time since 2017, and by the most in over four years. Vacancies dropped to their lowest level in almost two years.

The figures provide further evidence that employers are turning cautious as Brexit and a slowing world economy weigh on U.K. growth.

Key Insights

• Advertised vacancies fell by 11,000 to 813,000 in the three months through September, the lowest level since the autumn of 2017
• The number of people in work in the three months through August unexpectedly fell by 56,000. The decline was driven by part-time employees and self-employed workers. Total hours worked fell
• While the employment rate is higher than a year earlier at 75.9%, it is falling among the under-25s
• Fall in participation was insufficient to hold down unemployment, which rose by 22,000, lifting the jobless rate to 3.9%
• Average earnings growth slowed to 3.8%, both excluding and including bonus payments. Wage growth is still running well ahead of inflation, which averaged 1.9% in the same period
• Pay increases are not being matched by productivity gains, which could fuel price pressure and limit the scope for further wage growth

To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Andrew Atkinson

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