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Pound soars as UK jobless rate falls to lowest level since 2008 | Pound soars as UK jobless rate falls to lowest level since 2008 |
(1 day later) | |
A summer burst of job creation in the UK economy has pushed the employment rate to a record high and brought down the jobless rate to its lowest level in seven years. | A summer burst of job creation in the UK economy has pushed the employment rate to a record high and brought down the jobless rate to its lowest level in seven years. |
There were 31.12 million people in work, an increase of 140,000, in three months to August, the Office for National Statistics reported. That took the employment rate to 73.6 per cent, the highest since comparable records began in 1971. At the same time, the number of unemployed dropped by 79,000 and the jobless rate fell to 5.4 per cent, hitting its lowest since May 2008. | There were 31.12 million people in work, an increase of 140,000, in three months to August, the Office for National Statistics reported. That took the employment rate to 73.6 per cent, the highest since comparable records began in 1971. At the same time, the number of unemployed dropped by 79,000 and the jobless rate fell to 5.4 per cent, hitting its lowest since May 2008. |
The report was more positive than City analysts had been expecting and signalled a clear break from a series of jobs reports earlier in the year which suggested the UK employment boom was running out of steam. | The report was more positive than City analysts had been expecting and signalled a clear break from a series of jobs reports earlier in the year which suggested the UK employment boom was running out of steam. |
Sterling surged by a cent against the dollar, to $1.536, in the wake of the report as traders adjusted their bets on the timing of the next interest rate rise imposed by the Bank of England. The pound carried on rising against the greenback throughout the day and was trading at $1.544 by the end of the day. | Sterling surged by a cent against the dollar, to $1.536, in the wake of the report as traders adjusted their bets on the timing of the next interest rate rise imposed by the Bank of England. The pound carried on rising against the greenback throughout the day and was trading at $1.544 by the end of the day. |
“The wobble that the UK labour market experienced a few months back is now, it seems, well behind us,” said David Tinsley, of UBS. | “The wobble that the UK labour market experienced a few months back is now, it seems, well behind us,” said David Tinsley, of UBS. |
“The health of the jobs market continues to underpin the domestic economic recovery,” added John Hawksworth, the chief economist at PwC. | “The health of the jobs market continues to underpin the domestic economic recovery,” added John Hawksworth, the chief economist at PwC. |
Michael Saunders, of Citigroup, said it was possible that the UK now had the highest employment rate in the European Union. | Michael Saunders, of Citigroup, said it was possible that the UK now had the highest employment rate in the European Union. |
James Knightly, of ING, said the strong jobs report was “more evidence to suggest that market expectations of the first BoE rate rise being more than a year away seem too cautious”. | James Knightly, of ING, said the strong jobs report was “more evidence to suggest that market expectations of the first BoE rate rise being more than a year away seem too cautious”. |
Futures markets show that traders are not fully pricing in an interest rate rise until the second half of 2016. However, the ONS also reported that wages growth eased in the quarter to August, which could make it less likely that the Bank will imminently put up interest rates from their historic low of 0.5 per cent. Average earnings, excluding bonuses, were up 2.8 per cent year on year, down from 2.9 per cent the previous month and confounding expectations in the Square Mile that the rate would strengthen to 3.1 per cent. | Futures markets show that traders are not fully pricing in an interest rate rise until the second half of 2016. However, the ONS also reported that wages growth eased in the quarter to August, which could make it less likely that the Bank will imminently put up interest rates from their historic low of 0.5 per cent. Average earnings, excluding bonuses, were up 2.8 per cent year on year, down from 2.9 per cent the previous month and confounding expectations in the Square Mile that the rate would strengthen to 3.1 per cent. |
“There does not seem much need for the [Bank of England’s Monetary Policy Committee] to panic about wage growth yet,” said Ruth Miller, of Capital Economics. “Even if pay growth continues to pick up, this need not necessarily push the MPC into an early rate hike if it is accompanied by a recovery in productivity, which we still expect to see.” | “There does not seem much need for the [Bank of England’s Monetary Policy Committee] to panic about wage growth yet,” said Ruth Miller, of Capital Economics. “Even if pay growth continues to pick up, this need not necessarily push the MPC into an early rate hike if it is accompanied by a recovery in productivity, which we still expect to see.” |
The more up-to-date claimant count measure of unemployment rose slightly in September, up by 4,600 to 705,600, according to the ONS. But the youth unemployment rate, covering 16 to 24-year-olds, declined from 15.9 per cent to 14.8 per cent. | The more up-to-date claimant count measure of unemployment rose slightly in September, up by 4,600 to 705,600, according to the ONS. But the youth unemployment rate, covering 16 to 24-year-olds, declined from 15.9 per cent to 14.8 per cent. |
David Kern, of the British Chambers of Commerce, welcomed the decline in youth joblessness but said it wast still incumbent on the Government to do more to help. “The only way to secure a significant reduction in youth unemployment is to improve the skill base and reintroducing compulsory work experience will help empower school leavers with the workplace skills they need to thrive,” he said. | David Kern, of the British Chambers of Commerce, welcomed the decline in youth joblessness but said it wast still incumbent on the Government to do more to help. “The only way to secure a significant reduction in youth unemployment is to improve the skill base and reintroducing compulsory work experience will help empower school leavers with the workplace skills they need to thrive,” he said. |
The youth unemployment rate peaked at 22.5 per cent in late 2011. | The youth unemployment rate peaked at 22.5 per cent in late 2011. |
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