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U.K. Jobless Rate At 7-Year Low; Employment Rate At Record High

UKunemployment 141015

The U.K. unemployment rate declined to its lowest since 2008 pushing the employment rate to a record high, data from the Office for National Statistics showed Wednesday.

The ILO jobless rate fell to 5.4 percent in the three months to August, the lowest since June 2008, from 5.6 percent in the March to May period. During the three months to July, the rate was 5.5 percent.

Economists had expected it to remain unchanged at 5.5 percent.

During the June to August period, the employment rate was 73.6 percent, the highest since comparable records began in 1971. At the same time, there were 1.77 million unemployed, down by 79,000 from three months to May.

There was a marked drop in the youth unemployment rate, which was at 14.8 percent, down from 15.9 percent seen in March to May period.

"We've got the highest rate of employment in our history, and real terms pay rising strongly," Chancellor of the Exchequer George Osborne, said. "But with recent data showing our trading partners' growth is slowing we must not be complacent."

IHS Global Insight Economist Howard Archer expects the number of jobless to trend gradually down over the coming months, taking the unemployment rate down to 5.3 percent by the end of 2015.

Data today showed that the claimant count held steady at 2.3 percent in September as expected. It has been at 2.3 percent since March.

The number of people claiming jobseekers' allowance increased by 4,600 from August, confounding expectations for a decline of 2,200.

For the three months to August, earnings, including bonuses, increased 3 percent, slightly slower than the 3.1 percent rise forecast by economists and the 2.9 percent growth seen in July quarter. Excluding bonuses, earnings climbed 2.8 percent.

Today's figures suggest that the Bank of England need not panic about wage growth yet, Ruth Miller, a UK economist at Capital Economics, said. While financial markets have probably gone too far in pushing back expectations for the first rate hike until the first quarter of 2017, a rise before the second quarter of 2016 still seems unlikely, the economist added.

The latest Agents' summary of business conditions published by BoE revealed that employment intentions indicated continued growth in the workforce.

Recruitment difficulties were reported to be contributing to rising wage pressure in the service sector, but weak consumer price inflation had reduced the pressure on some employers to raise pay growth, data showed.

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