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UK employment rate at record high despite vote to leave European Union UK employment rate at record high despite vote to leave European Union
(about 4 hours later)
Britain’s jobs market has continued to brush off the Brexit vote after a rise in employment in August to a joint record high. Britain’s buoyant jobs market brushed off the Brexit vote in August to maintain its record employment rate of 74.5%, the same as the previous quarter, to take the total number of people with a job to just below 32 million.
Figures from the Office for National Statistics showed employment rose just short of 32 million and an employment rate of 74.5% in the latest quarter, which matched the record highs in the last quarter. But analysts said that more than half the 106,000 rise in employment was among part-time workers, reversing a boom in full-time jobs in 2015 and most of this year.
Wages growth, excluding bonuses, accelerated to 2.3% from 2.1% in July, boosting the take-home pay of workers. The inactivity rate dropped, showing that fewer people were out of the workforce altogether. A rise in wages, excluding bonuses, to 2.3% from 2.1% in July was also downplayed by business groups, which warned that workers were likely to come under pressure from rising inflation eating into their disposable incomes.
But a 10,000 rise in unemployment was a sharp increase on the previous month, though most analysts said it was unlikely to be a sign of anxiety about leaving the European Union and it left the rate of joblessness steady at 4.9%. The CBI said pay growth remained “lacklustre” and was under pressure from an inflation rate that hit 1% in September and could rise above 2% next year.
Employment growth slowed from the 173,000 rise in the three months to July to 105,000 in August. It urged ministers to focus their efforts on supporting industry to raise productivity and increase wages, to offset the effects of rising prices.
One analyst said the figures were “relatively strong given the amount of labour market slack that has been used up in recent times”. As the debate hots up over the form Britain’s exit from the EU will take, the squeeze on incomes and slowing jobs growth is expected to put the Treasury on the back foot.
The strong labour market, which employs more people than at any time since records began in 1971, is considered one of the government’s main achievements. A permanent decline in jobs growth would put pressure on the chancellor, Philip Hammond, to boost incentives in next month’s autumn statement.
Employment minister, Damian Hinds, said the jobs market remained robust after recording a high number of vacancies, rising wages and another month of jobs growth.
“It’s great news for Britain, as the employment rate remains at a record high with more than 31.8 million men and women in work,” he said.
The British Chambers of Commerce said the rise in employment was welcome, before warning against complacency after recent surveys of employers showed that businesses had scaled back investment and new hiring.
Mike Spicer, the organisation’s director of economics, said it was also “important to note that it is the first rise in unemployment for a while, and the rise in employment was smaller than seen in recent quarters.
“The post-referendum labour-market picture is unlikely to fully emerge for some time, but our own survey data suggests that businesses have lowered their expectations over hiring more staff, and investing,” he said.
He echoed the CBI’s message when he said: “Next month’s autumn statement is a great chance for the government to pull out all the stops to support business confidence – and firms will repay that backing with investment, hiring, training and export growth.”
Figures from the Office for National Statistics showed the unemployment rate was steady at 4.9%, its lowest since 2005, and jobs vacancies showed no sign of disappearing after the number stayed at 750,000 from July.
But employment growth slowed from the 173,000 rise in the three months to July to 106,000 in August.
A rise in the number of people unemployed also indicated that employers were becoming wary of holding on to staff in the more uncertain period following the Brexit vote.
A total of 24,000 joined the unemployment register in August from July, compared with a previous rise of 10,000 quarter on quarter.
David Blanchflower, a former member of the Bank of England’s interest-rate-setting committee, said the rise in unemployment showed cracks were appearing in the labour market data.
He said the rise in wages had also failed to push take home pay above its pre-crash peak once inflation was taken into account. He said real total pay of £364 a week was still 7.7% below the level seen in February 2007, when it stood at £386.
Chris Williamson, chief business economist at IHS Global Insight, struck a similar tone when he said: “[Business] surveys have also indicated a waning in the hiring trend, and suggest that we’re likely to see a more severe weakening of the official labour market data in coming months.
“The REC recruitment industry survey shows the number of people placed in permanent jobs by agencies has slowed markedly in recent months, down to levels that are consistent with unemployment rising, albeit rebounding somewhat in September from the low seen in July.
“Similarly, PMI survey data indicate that employment growth remains stunted compared with earlier in the year, amid widespread anxiety about committing to new hires, given the uncertain political and economic outlook,” he said.