U.K. Employment Steady, Wages Pick Up in Resilient Labor Marketby
Number of people in work falls less than economists forecast
Wage growth accelerates to fastest annual pace since 2015
The U.K. economy lost fewer jobs than expected and wage growth picked up toward the end of 2016, suggesting the labor market remains relatively resilient.
The number of people in work fell by 9,000 to 31.8 million in the three months through November, whereas economists had predicted a 35,000 decline. The jobless rate stayed at 4.8 percent, the lowest since 2005, and wage growth reached the highest rate since 2015.
The labor market has cooled since the end of 2015, when it was adding more than 200,000 jobs a quarter, but there are few signs of hiring going into reverse as Britain prepares to begin negotiations to leave the European Union.
Unemployment fell by 52,000 to 1.6 million over the period, as the drop in the number of people in work more than offset those leaving the workforce, the Office for National Statistics data show. In November alone, the jobless rate stayed at 4.9 percent. Jobless claims -- a narrower measure of unemployment -- fell for the first time in five months in December, by 10,100.
While consumer spending has helped the economy perform solidly since the June Brexit referendum, a slowdown is predicted this year as a pound-induced pickup in inflation squeezes household incomes.
In the latest three months, annual wage growth accelerated to 2.8 percent from 2.6 percent. Excluding bonuses, the rate rose to 2.7 percent. While pay picked up modestly, consumer-price inflation surged to 1.6 percent in December and is forecast to push close to 3 percent this year, far exceeding the Bank of England’s 2 percent target.
The pressure on incomes is likely to keep domestically generated inflation in check, leading many economists to predict the BOE will keep interest rates at a record low for some time.