U.K. Jobless Rate Hits 11-Year Low as Pay Growth Picks Upby
Wage growth reaches 2.3% as new minimum wage takes effect
Employment rises in sign of resilience before Brexit vote
The U.K. labor market remained resilient in the face of the referendum on European Union membership and lackluster global growth.
The jobless rate declined to 5 percent in the three months through April, the lowest since 2005, the Office for National Statistics in London said on Wednesday. Economists in a Bloomberg survey had expected the rate to stay at 5.1 percent. The number of people in work rose by 55,000 to a record 31.6 million.
Pay pressures also ticked higher. Basic-wage growth accelerated to 2.3 percent from 2.2 percent in the first quarter, instead of easing as economists forecast. In April alone, the rate rose to 2.5 percent from 1.9 percent in March, partly reflecting the introduction of a higher minimum wage.
“The solid labor-market figures should allay fears that uncertainty ahead of the referendum has significantly weighed on the economy in the second quarter,” said Ruth Miller, an economist at Capital Economics Ltd. in London. “If this continues, and the U.K. votes to stay in the EU, a rate hike might come back on the agenda before too long.”
The pound rose the most in a week and was at $1.4181 as of 12:13 p.m. London time, up 0.5 percent on the day.
The data come as Bank of England policy makers prepare to announce their monthly interest-rate decision on Thursday. Barring a vote to leave the EU, economists expect the BOE to raise its benchmark rate from a record-low 0.5 percent in the first half of next year, according to a Bloomberg survey.
Unemployment fell by 20,000 to 1.67 million in the latest three months. In April alone, the jobless rate declined to 4.8 percent, the lowest since September 2005. Jobless benefits, a narrower measure of unemployment, fell 400 in May and the rate was unchanged at 2.2 percent. In April, claims rose 6,400 instead of the 2,400 fall previously estimated.
Annual wage growth including bonuses in the three months through April was unchanged at 2 percent, a faster pace than forecast. April saw pay growth accelerate to 2.5 percent from 2 percent, with the new National Living Wage being most keenly felt in the retail sector, the ONS said. In the private sector, wages grew by 2.7 percent.
While employers continued to add jobs, the pace of improvement has slowed, suggesting some hiring is being put on hold amid weaker global growth and concerns over the June 23 Brexit referendum. In the three months through January, the number of people in work rose by 118,000.
The fall in unemployment also partly reflected a slowdown in participation, with the number of people declared economically active rising just 36,000 in the latest period. Vacancies fell 9,000 between March and May to 749,000.
Separate figures showed employment in central and local government rose 1,000 in the first quarter to 5.17 million, reflecting increased payrolls in the National Health Service.