U.K. Jobs Growth Keeps Unemployment Rate at Lowest Since 1970s
(Bloomberg) -- The U.K. labor market continued its impressive performance in the three months through February as employment jumped and wage growth far outpaced inflation.
The number of people in work rose by 179,000 to a record high, keeping unemployment at 3.9 percent, the lowest rate since 1975, the Office for National Statistics said Tuesday. The growth in employment was driven mainly by women, who accounted for more than 140,000 of the increase.
Basic wages rose 3.4 percent from a year earlier, close to an 11-year high. The figures help to explain the resilience of consumer spending, which has kept the economy growing as companies slash investment amid the continuing deadlock over Brexit. Pay is now growing comfortably ahead of inflation, which averaged less than 2 percent in the period.
The tightness of the labor market has raised alarm bells at the Bank of England but continuing Brexit uncertainty is expected to keep policy makers from raising interest rates any time soon.
What Bloomberg’s Economists Say
“The labor market continued to exude an air of invincibility in the latest cut of data. That’s despite all the uncertainty created by Brexit negotiations. Although its resilience is likely to be tested this year, we expect unemployment to remain broadly unchanged.”
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The buoyancy reflects the weakness of productivity. With hourly output barely rising, firms need to keep adding workers to meet demand. It may also be the result of Brexit jitters, with firms choosing to hire people rather than commit to big capital investment decisions in case Britain crashes out of the European Union in an economically damaging no-deal Brexit.
Employment has risen by over 450,000 in the past year, with full-time work and employee jobs accounting for all of the increase. Employment growth was strongest among the over 50s.
The number of people classed as inactive -- neither in a job nor looking for work -- fell further in the latest three months, as more students and women looking after family or home joined the workforce. Female unemployment is at a record low.
Surveys suggest employers are becoming more cautious, though the labor market is expected to remain tight. Wage growth including bonuses maintained its 3.5 percent pace, the fastest since 2008.
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