UK unemployment falls as wage growth slows


Unemployment fell by 38,000 between February and April with the employment rate at a record high, according to figures out today from the Office for National Statistics (ONS).

But average earnings, excluding bonuses, rose by 2.8 per cent in the three months to April – a slight dip on the 2.9 per cent growth rate recorded between January to March.

Including bonuses, pay growth fell from 2.6 per cent to 2.5 per cent, which was in line with expectations.

The employment rate was at a record high of 75.6 per cent after the economy added 146,000 jobs, higher than the 120,000 that had been predicted by economists. The number of people in work was 32.4m, up 440,000 from the year before.

Read more: US smashes expectations for new jobs as unemployment edges down

For February to April, the unemployment rate was 4.2 per cent, down from 4.6 per cent a year earlier, and marking the joint lowest since 1975.

Ed Monk, associate director for personal investing at Fidelity International, said: "Todays wage growth figures are likely to provide British workers with a harsh reality check. After seeing their wages grow in real terms for the past couple of months, todays figures from the ONS show wage growth back to 2.5 per cent in the three months to April, when bonuses are included."

Monk said tomorrow's data on inflation will provide "a fuller picture".

"Higher prices for petrol and other fuels may put an upward pressure on inflation and erode the recent growth in real wages," he said. "Households cant catch a break. They were getting richer for a while but it now looks like that wont last."

John Hawksworth, chief economist at PwC, said: "Today's data confirmed generally positive trends in the jobs market in recent months, with the employment rate remaining at a record high and the unemployment rate at its lowest levels since 1975."

He added:

But average hours worked fell back somewhat in the last three months. Total hours worked actually fell slightly over this period compared to the previous three months. This helps to explain why total output growth has been relatively weak recently despite solid growth in the number of jobs.

Overall, this new data does not significantly alter the big picture of a modestly growing economy combining relatively strong growth in jobs with weaker growth in productivity per worker and, linked to this, only modest real pay growth.

Read more: Higher oil prices to boost UK inflation with ECB and Fed in tightening mood




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