UK unemployment falls to lowest level since 2005
Unemployment in the UK has dropped to the lowest levels witnessed in more than a decade, as the strength of hiring helped to push up pay growth.The unemployment rate slid to 5pc in the quarter to April, according to the Office for National Statistics (ONS). The fall came as a surprise to economists, who had anticipated that the jobless rate would remain unchanged at 5.1pc.
Employment was also strong, rising by 55,000 in the three-month period, if below the 60,000 expected by analysts. The employment rate remained unchanged at 74.2pc, the highest level on record.
Ruth Miller, of Capital Economics, said that while the employment gains were “below the strong rises seen last year, some easing in the pace of the jobs recovery from its previous strength was always to be expected”.
This would be, in part, because of “how remarkable the labour market recovery has been over the past few years”, Ms Miller said, with less joblessness left to be eroded. The recent gains left the unemployment rate at its lowest point since October 2005.
James Knightley, of ING Bank, said if the data remained strong, it would “help build the case for an interest rate rise early next year”.
The economist added that “this should be good news for pay”, as employers have to pay more to attract and retain the best staff. This jobs market tightness helped to boost wage growth, rising from 2.1pc year-on-year to 2.3pc, excluding bonuses.
Alan Clarke, a Scotiabank economist, said that as the latest data were for April, it was “probably a little too soon to see any full-blown pre-Brexit jitters holding back hiring”. He said that if the UK did vote to leave, “there is likely to be an overhang of weak data for several months, while all the pre-referendum uncertainty washes out”.