British unemployment rate hits 43-year low, wages growth remains weak

Source: Xinhua| 2018-08-15 02:35:46|Editor: yan
Video PlayerClose

LONDON, Aug. 14 (Xinhua) -- The British unemployment rate shrugged off Brexit worries to reach a low not seen for 43 years, according to data released on Tuesday.

The unemployment rate fell from 4.2 percent in May to 4 percent in June, according to data from the Office of National Statistics (ONS).

This is the lowest rate of unemployment since February 1975.

The unemployment rate underlines the continued strength of the labor market, despite a slowdown in the rate of job growth in the three months to the end of June to just 42,000.

Lower employment growth may in part be caused by employers finding it harder to find workers as the labor market tightens, and in some cases this difficulty is made worse by the significantly fewer number of workers coming from the European Union (EU), as would-be workers avoid coming to Britain while Brexit uncertainty over their future status remains.

There is evidence of this in a number of surveys, including from the Bank of England's (BoE) regional agents and the purchasing managers index survey.

The difficulty in finding suitable workers is also reflected in the number of vacancies, which rose to a record 829,000 in the three months to June.

Employment at 32.386 million in the three months to June was below the record level of 32.394 million in the three months to May, but the employment rate was stable at a record high of 75.6 percent.

In separate data also released on Tuesday by the ONS, wage growth continued to decelerate, driven primarily by private sector workers.

The rate of wages growth to the end of June declining to an annual rate of 2.4 percent from an annual rate of 2.5 percent to the end of May. Core wages also fell by 0.1 percentage point to 2.7 percent.

"Despite the further tightening of the labor market, earnings growth remained weak -- indeed both total and regular earnings growth softened in the three months to June," said Howard Archer, chief economic adviser to the EY ITEM Club.

The BoE raised the bank rate by 25 basis points to 0.75 percent at the beginning of August, only the second rate rise in over 11 years.

Part of the rationale for the rate rise was that employment was at a record high, and that the jobless rate was at a low not seen for decades, which would lead to higher-than-inflation wages growth over a two-year period.

Nothing in these figures challenges the BoE's assumptions.

"Despite the recent relapse in earnings growth, the Bank of England retains the view that earnings growth will firm gradually over the coming months, primarily as a consequence of growing recruitment difficulties in some sectors," Archer told Xinhua.