U.K. Employment Declines for First Time in More Than a Yearby
Jobless rate remains at 4.8%, statistics office data show
Pay growth accelerates to 2.6%, fastest since August 2015
U.K. employment fell for the first time in more than a year in the three months through October as the labor market showed some signs of weakness.
The number of people in work fell by 6,000 to 31.76 million people, the Office for National Statistics said on Wednesday. While the decline was small, and the jobless rate was unchanged at 4.8 percent, the statistics office said the labor market “appears to have flattened off in recent months.”
“This is the first genuine disappointment we have seen in the hard data since the Brexit vote,” said Alan Clarke, an economist at Scotiabank in London. “This has been a gradual deterioration” and “is bad news for spending growth next year.”
Single-month data showed that the unemployment rate rose to 4.9 percent in October from 4.6 percent in September. Unemployment fell over the three-month period, by 16,000 to 1.62 million, as the drop in the number of people in work was more than offset by those leaving the labor force. There was a 22,000 decline in the economically active population during the period.
In a worrying sign, full-time employment dropped by 51,000 between August and October. Jobless claims, a narrower measure of unemployment, rose for a fourth month in November. The pound was little changed against the dollar after the data were released and was at $1.2661 as of 9:56 a.m. London time.
The figures come a day before the Bank of England announces its latest policy decision, when it’s forecast to keep its key interest rate at a record-low 0.25 percent. After cutting the rate in August, policy makers have since warned of inflation risks because of the pound’s drop since the U.K. voted in June to leave the European Union.
“If job opportunities are deteriorating, we see further downside risk for confidence and activity in general,” said James Knightley, an economist at ING Bank NV in London. “While the BOE are officially neutral on the outlook for monetary policy, we still think a rate cut is more likely than a hike next year.”
For consumers facing the prospect of accelerating inflation -- and a potential squeeze on their incomes -- the latest labor report had some good news. Regular pay growth accelerated to 2.6 percent, the fastest since August 2015, leaving real wage growth at 1.7 percent for a fourth month. Still, with price growth set to quicken rapidly early next year, increases in real incomes could be eroded.