U.K. Wages Cool, Vacancies Fall in Brexit-Hit Labor Market
Vacancies fell below 800,000 for the first time in two years and wages grew at their slowest annual pace since 2018.
(Bloomberg) -- The U.K. labor market and manufacturing sector displayed further signs of nervousness around the now-postponed Oct. 31 deadline to leave the European Union and in the run-up to last week’s general election.
Vacancies fell below 800,000 for the first time in two years and wages grew at their slowest annual pace since 2018, the Office for National Statistics said Tuesday. Employment rose marginally, leaving the jobless rate unchanged. A separate survey showed factory output plunged the most since the financial crisis in the fourth quarter.
With a victorious Boris Johnson promising to deliver Brexit by the new deadline of Jan. 31, the hope is that the confusion that has hung over the economy -- and spread to the once resilient labor market -- will now begin to dissipate.
The uncertainty is far from over, however, as Britain and the EU face the task of striking a trade deal in just 11 months. The prime minister is set to raise the stakes by making it illegal to extend the proposed transition period, meaning the U.K. will crash out of the EU at the end of next year unless an agreement is reached.
Concern about Johnson’s latest move hit the pound on Tuesday, ending its post-election rally. It fell 1% to $1.3198 as of 10:55 a.m. London time. The FTSE 250 index of stocks dropped 1.2%.
The manufacturing report from the Confederation of British Industry also showed weakness in demand at factories. The measures for total orders and export orders both declined in December.
Key Insights
- The number of people in work rose 24,000 between August and October, taking the employment rate to a record 76.2%. But all of the increase came from people working for themselves. Employee numbers fell, suggesting weak demand for labor among firms
- Unemployment fell 13,000, and the jobless rate stayed at 3.8%, matching the lowest since the mid 1970s. The participation rate was unchanged over the quarter. Female unemployment fell to a record low
- Vacancies declined by 20,000 in the three months through November to 794,000, the lowest level since 2017
- Average earnings excluding bonuses slowed to an annual 3.5% in the period through October from 3.6% in September, and rates as high as 3.9% over the summer
- Total pay growth slowed to 3.2%, the least since 2018. The sharp decline from 3.7% in September -- the biggest drop since 2015 -- reflected strong bonus payment a year earlier
What Bloomberg’s Economists Say...
“The jobs market held up better than we expected in the three months to October. The one chink in the armor was a fall in the number of vacancies, although we expect that trend to reverse going into 2020.”
--Dan Hanson. Read the full REACT
--With assistance from Jill Ward.
To contact the reporters on this story: David Goodman in London at dgoodman28@bloomberg.net;Andrew Atkinson in London at a.atkinson@bloomberg.net
To contact the editor responsible for this story: Fergal O'Brien at fobrien@bloomberg.net
©2019 Bloomberg L.P.