UK unemployment falls to its lowest rate in 11 years

British unemployment fell to its lowest rate in 11 years in the third quarter but there are signs that the labour market is slowing in the wake of the Brexit vote.

The jobless rate fell to 4.8 per cent from 4.9 per cent in the second quarter, the Office for National Statistics figures Wednesday show. But the economy added only 49,000 workers, half the number expected and down from a 172,000-increase in the previous three months.”

Unemployment is at its lowest for more than 10 years, and the employment rate remains at a record high,” ONS statistician David Freeman said in a statement.

“Nonetheless, there are signs that the labour might be cooling, with employment growth slowing.”

There were also signs that rising inflation is taking its toll on living standards, as real wages grew just 1.7 per cent in the third quarter, matching the slowest rate since February 2015.

A cooling jobs market and rising prices threaten to undermine consumer spending, which has driven almost four years of economic expansion.

Uncertainty as Britain negotiates its split from the European Union is expected to hit hiring and investment, making it hard for workers to negotiate significant pay increases.

Unemployment fell by 37,000 to 1.6 million as the economy registered little increase in the economically active workforce. Jobless claims – a narrower measure of unemployment – increased for a third month in October.

They gained 9,800, the biggest rise since May, following an upwardly revised 5,600 increase in September.”

Today’s figures confirmed the indications from the surveys that the Leave vote is starting to sap the jobs recovery of its previous strength,” said Ruth Gregory, an economist at Capital Economics in London.

“The weakening in the employment surveys suggest that employment growth will probably slow further. This moderation should prevent wage growth from picking up in coming months.”

Average-earnings growth stayed at 2.3 per cent in the three months through September, though the rate excluding bonuses picked to 2.4 per cent from 2.3 per cent. – (Bloomberg)