LONDON (Reuters) – Britain’s unemployment fee fell unexpectedly to a brand new 43-year low within the three months to June and productiveness rose, however there was little upside for many staff as pay development slowed to its weakest in 9 months.
FILE PHOTO: Workers watch as members of the Household Cavalry march in the course of the Changing of the Guard ceremony exterior of Windsor Castle in Windsor, Britain, May eight, 2018. REUTERS/Toby Melville
Tuesday’s official figures additionally confirmed the sharpest annual fall within the variety of EU staff in Britain since 1997, persevering with a development seen for the reason that 2016 Brexit vote.
The figures painted a well-recognized image of tightness in Britain’s labor market — together with report excessive job vacancies — failing to translate into robust wage development.
“This will not be what the Bank of England will have wanted to see, as one of the justifications for (its) decision to hike rates earlier this month was that it was expecting wage growth to start lifting off. This hasn’t happened yet,” mentioned Emma-Lou Montgomery, an affiliate director at Fidelity International.
The BoE raised rates of interest for under the second time for the reason that monetary disaster earlier this month.
Tuesday’s knowledge additionally confirmed productiveness grew at its quickest annual fee since late 2016 and the variety of individuals whose essential job was an insecure zero-hours contract fell by essentially the most since 2000, the Office for National Statistics mentioned.
The unemployment fee fell to four.zero % within the April-June interval, the bottom for the reason that three months to February 1975 and beating economists’ forecasts for it to carry regular at a earlier low of four.2 %.
The drop got here regardless of a smaller-than-expected variety of jobs created over the three-month interval, of 42,000 — lower than half the typical forecast by economists in a Reuters ballot.
“Overall the data could be described as mildly positive for the pound, and the currency quickly spiked up to its highest level of the day not long after the release,” mentioned David Cheetham, chief market analyst at forex dealer XTB.
“This seemed to be a bit of a knee jerk reaction to the unemployment figures and the gains have been pared as traders digested the miss in wages,” he added.
Total annual wage development slowed to a nine-month low of two.four %, beneath forecasts for it to carry at 2.5 %. The ONS mentioned modifications to the timing of annual bonus funds was partly accountable.
Excluding bonuses, pay development held regular at 2.7 %, effectively beneath the four % fee typical earlier than the monetary disaster a decade in the past.
Output per hour labored grew by 1.5 % year-on-year within the April-June interval, the most important enhance since late 2016 after a zero.9 % rise within the first quarter of 2018.
Britain’s economic system warmed up a bit within the second quarter from its winter slowdown of early 2018, official knowledge confirmed final week, however there was no signal of an finish to its stuttering efficiency forward of Brexit subsequent yr.
With lower than eight months till Britain is because of go away the European Union, the ONS knowledge confirmed an acceleration of EU nationals leaving Britain’s workforce.
In the second quarter there have been 2.35 million EU nationals working in Britain, down 86,000 on a yr in the past — a three.6 % drop that was the most important since data started.
The variety of nationals from the eight East European international locations that joined the EU in 2004 fell by 117,000, an 11.7 % drop on the yr.
The variety of staff employed on often-precarious zero-hours contracts fell by the same quantity over the yr — the most important drop since 2000 — to 780,000 or 2.four % of the workforce, the smallest since 2015.
Editing by Catherine Evans