UK unemployment falls but hiring spree stalls to 15-month low

http://www.theguardian.com/business/2015/jan/21/uk-unemployment-falls-hiring-spree-stalls

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Unemployment in Britain has continued to decline over the past three months, but at the slowest pace since mid-2013, raising fears that the hiring spree is starting to slow.

Official figures showed that the number of people out of work declined by 58,000 in the three months to November, driving the unemployment rate down to 5.8%.

The Office for National Statistics said that was the smallest fall since July to September 2013. Analysts have warned that slowing growth in the eurozone and uncertainty about the outcome of May’s general election could lead businesses to hold back on investment plans.

However, the government seized on this latest decline in unemployment as evidence that its economic plans are wowrking. “We’re continuing to buck the European trend with strong growth and record job creation,” said chief secretary to the Treasury Danny Alexander.

Unemployment also continued to fall on the narrower, claimant count index, which measures the number of people receiving out-of-work benefits. The claimant count was 823,900 in December, down 24,200 on the month. That figure compares to a fall of almost 40,000 in November.

For those in work, there was fresh evidence that workers are starting to see the growth in their pay packets outpace inflation, after the longest decline in living standards for at least a century.

Annual wages increased by an average of 1.8% in the year to November, up from 1.6% in October and the fastest pace for two years. Inflation measured on the consumer price index dropped to just 0.5% in December, as the plunging price of oil fed through to petrol prices.

Chris Williamson, of data provider Markit, said, “the data bode well for a revival of consumer spending and household well-being in coming months: increasing numbers of people are in paid employment and wage growth is outstripping inflation, meaning incomes are rising, and falling oil prices mean that more of these incomes can be saved or spent on goods and services other than fuel.”

However, Labour’s shadow work and pensions secretary Rachel Reeves said: “today’s fall in overall unemployment is welcome, but wages remain sluggish and working people are £1,600 a year worse off since 2010.

Jobs Economist John Philpott said an increasing number of vacancies was helping to drive up wages, as employers have to pay more to attract staff.

“The most encouraging news in the latest quarterly figures is a rise of 19,000 in the number of job vacancies to a new record level of 700,000. This indicates a modest ongoing tightening of conditions in the labour market which underpins a continued increase in pay growth and a further improvement in real weekly earnings.”

However, there are stark differences between sectors: average public sector pay rose at just 0.6% in the year to November, while private sector pay was up 2.1%, with the strongest growth - 2.6% - seen in finance and business services.