UK wages and employment continue to grow despite Brexit uncertainty
The number of people in work in Britain has risen to its highest level since record began in 1971, official data showed on Tuesday, with wage growth at a 10-year high.
According to the Office for National Statistics, there was an estimated 32.53m people in work in the UK between September and November 2018. That was 141,000 higher than June to August and up 328,000 on the previous year.
The figure represents an employment rate of 75.8%.
The unemployment rate was 4%, the lowest since December 1974 to February 1975 and slightly below a consensus of 4.1%. The number of people out of work was 1.37m, up marginally on the previous three months but down 68,000 year-on-year.
Average weekly earnings were ahead 3.4% year-on-year including bonuses, or 3.3% excluding them – the highest annual growth rate since September to November 2008.
Wage growth continued to outpace inflation, with the consumer price index falling back slightly to a two-year low of 2.1% in the latest update.
David Freeman, head of labour market at the ONS, said: “The number of people working grew again, while the share of the population in work is now the highest on record. Meanwhile, the share of the workforce looking for working and unable to find it remains at its lowest for over 40 years, helped by a record number of job vacancies.
David Cheetham, chief market analyst at XTB, welcomed the numbers. “With inflation recently falling back close to the Bank of England’s 2.0% target, this represents a decent increase in real wages for workers which will likely aid consumption going forward.
“The pound has risen to its highest level of the week in the immediate reaction, and trades back above the $1.29 handle once more. The strong data is all the more pleasing given the ongoing uncertainty surrounding Brexit and just serves to illustrate that despite the continued headwinds, the labour market is holding up surprisingly well.”
Tej Parikh, senior economist at the Institute of Directors, said: “The recent pick-up salaries, coupled with the fall in inflation, will be welcomed by households, though the hangover of weak real wage growth over the past 18 months will continue to be felt on the high street for the time being.
“The Bank of England will be little moved by today’s data. While the momentum behind wage growth may build support for interest rate hikes, Brexit remains the spanner in the works for the Monetary Policy Committee.”
Emma-Lou Montgomery, associate director for personal investing at Fidelity International, said: “It has been long suggested that wage growth has been the missing piece of the puzzle in Britain’s long, slow recovery from the financial crisis. It should be key to unlocking a return to monetary normality. But despite several months of UK wage growth outstripping inflation, it seems that the continued uncertainty created by the political deadlock of Brexit continues to play on the MPC’s mind.”
However, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Solid employment growth and accelerating wages strengthen the case for the MPC to raise interest rates again soon, even if the Brexit outlook remains uncertain. The 141,000 three-month on three-month rise in employment was the biggest since April, and ensured that the unemployment rate edged back down to 4%, despite strong growth in the workforce.
“Admittedly, the labour market is a lagging indicator of the economy’s health. But business surveys point to year-over-year growth in employee numbers holding steady near November’s 1.1% rate over the next six months, which should ensure the unemployment rate remains on a slight downward trend.”