UK unemployment and earnings growth both fall
Wednesday August 15, 2007
Unemployment fell in Britain in the latest three months while growth in average earnings slumped to a four-year low, official data showed this morning, showing a lack of inflationary pressure coming from the labour market.
In news that will comfort the Bank of England's monetary policy committee, average earnings growth slowed to 3.3% in the year to June from 3.5% in the year to May. Excluding bonuses, the growth rate slowed to 3.4% from 3.5%. These are the lowest rates since 2003.
The MPC has long been concerned that last year's pick-up in headline inflation would stoke inflationary pay rises this spring. But there is no sign that this has happened and the MPC thinks influences such as immigration might have held wage growth down.
Coming on top of yesterday's surprise drop in inflation to just 1.9%, this data is likely to add to speculation that interest rates have peaked at their current level of 5.75%.
The Office for National Statistics also said that on the claimant count measure, there was an 8,500 fall in joblessness last month to 855,000 while on the government's preferred labour force survey measure there was a fall of 45,000 in the three months to June, giving a total of 1.65 million out of work. That was the biggest drop since December 2003. The LFS measure picks up those not working but not claiming benefit.
As a result the jobless rate fell back to 5.4% from 5.6% in the three months to May, the lowest rate in more than a year. The claimant count rate was steady at just 2.6%.