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Unemployment at lowest level for seven years, figures show Unemployment at lowest level for seven years, figures show
(about 4 hours later)
The chancellor has seized upon news that UK unemployment has fallen to its lowest level in seven years and wages are rising at an annual rate of 3%, claiming it is evidence that his economic policies are bearing fruit. George Osborne has seized upon news that unemployment has fallen to its lowest level in seven years to press home the message that his economic plan is bearing fruit.
The latest official snapshot of the jobs market, covering the period from June to August, showed a 79,000 decline in unemployment to 1.77 million, taking the jobless rate to 5.4%, down from 5.5%. The latest official snapshot of the jobs market, published on Wednesday and covering June to August, showed a 79,000 decline in unemployment to 1.77 million, taking the jobless rate to 5.4%, the lowest since 2008. The employment rate, at 73.6%, was the highest since records began in 1971.
Nick Palmer, an ONS labour market statistician, commenting on the news, said: “Today’s fall in unemployment has more than outstripped the recent rises, leaving unemployment at its lowest level since mid-2008.” The employment rate, at 73.6%, was the highest since records began in 1971. The chancellor said: “It is great news that Britain’s economic plan continues to create jobs and increase pay. We’ve got the highest rate of employment in our history and real terms pay rising strongly.”
Average pay, including bonuses, increased at an annual rate of 3%, the Office for National Statistics (ONS) said. With inflation at zero in August, before slipping to -0.1% in September, according to the latest data, many households’ living standards are rising after the long post-recession squeeze.
John Philpott, of the Jobs Economist consultancy, said the improvement in the labour market evident in the latest figures contrasted with the earlier months of 2015, when there was evidence that firms’ appetite for hiring was waning.
“The explanation for the flip in behavior is unclear, though it’s possible that recruiters were cautious in the first half of the year because of political uncertainty surrounding the general election in May. What is clear is that hiring picked up strongly from June onwards,” he said.
Nick Palmer, an ONS labour market statistician, commenting on the data, said: “Today’s fall in unemployment has more than outstripped the recent rises, leaving unemployment at its lowest level since mid-2008.”
On the more timely claimant count basis, which measures the number of people claiming out-of-work benefits, unemployment rose by 4,600 in September to 796,200.On the more timely claimant count basis, which measures the number of people claiming out-of-work benefits, unemployment rose by 4,600 in September to 796,200.
George Osborne said: “It is great news that Britain’s economic plan continues to create jobs and increase pay. We’ve got the highest rate of employment in our history and real terms pay rising strongly.” The claimant count is classed as an “experimental” statistic by the ONS, however, because the changeover to the government’s new universal credit system is complicating the task of data collection.
With inflation running at zero in August before slipping to -0.1% in September, according to the latest data published on Tuesday, average workers are finally starting to see their living standards rise after a long post-recession squeeze. Palmer added: “Wages continued to grow strongly in real terms.” There was little evidence of inflationary pressures picking up strongly in the labour market, however, something hawks on the Bank of England’s monetary policy committee have been looking out for.
John Philpott, of the Jobs Economist consultancy, said the improvement in the labour market evident in the latest figures contrasted with the first half of 2015, when there was evidence that firms’ appetite for hiring was waning. While real wages continued to rise in August, the rate of pay growth appears to be levelling off. Excluding bonuses, whole economy average earnings increased at 2.8% in the three months to August, down from 2.9% between April and July.
“The explanation for the flip in behavior is unclear, though it’s possible that recruiters were cautious in the first half of the year because of political uncertainty surrounding the general election in May. What is clear is that hiring picked up strongly from June onwards, with the number of employees rising by 120,000 in the three months to August, with full-timers accounting for more than half this increase,” he said. That 2.9% figure is the one that will be used to uprate payments of the basic state pension next April, in line with the “triple lock”, which promises an increase of 2.5%, average earnings growth, or inflation, whichever is highest.
While real wages continued to rise, the rate of pay growth appears to be levelling off. Excluding bonuses, whole economy average earnings increased at 2.8% in the three months to August, down from 2.9% between April and July. Simon Wells, UK economist at HSBC, said: “Today’s wage data alongside yesterday’s inflation numbers may encourage MPC members with a dovish inclination to wait for stronger evidence of rising price pressures before voting for an interest rate rise.”
Despite recent increases, pay remains considerably below the levels seen before the 2008 financial crisis, once inflation is taken into account. The Resolution Foundation thinktank pointed out that in some sectors, particularly construction, average pay remains well below the pre-crisis peak. But Wells added that confirmed anti-inflation hawks, such as Ian McCafferty, who has repeatedly voted for a rate rise at recent meetings of the MPC, would not be deterred, because the renewed fall in unemployment suggested the labour market remained strong. He said: “Today’s labour market data were a mixed bag.”
Despite recent increases, average pay across the economy remains considerably below the levels seen before the 2008 financial crisis, once inflation is taken into account.
The Resolution Foundation thinktank pointed out that in some sectors, particularly construction, average pay remains well below the pre-crisis peak.
Matthew Whittaker, Resolution’s chief economist, said: “As [the] recovery builds, attention will turn to who is benefiting from it. The strong recent performance of wages in the low-paying retail sector is encouraging, but the picture is much less promising in manufacturing and construction.”Matthew Whittaker, Resolution’s chief economist, said: “As [the] recovery builds, attention will turn to who is benefiting from it. The strong recent performance of wages in the low-paying retail sector is encouraging, but the picture is much less promising in manufacturing and construction.”
The details of the data also underlined the contrasting fortunes of private sector workers and those in the public sector, who have been hit by repeated pay freezes as the Treasury seeks to tackle the deficit.
Private sector pay rose at an annual rate of 3.4% in the three months to August, more than three times the 1.1% rate seen in the public sector.