UK unemployment falls to lowest stage since 1974

UK unemployment hit a recent multi-decade low within the three months to August as long-term illness stored extra older employees out of the labour market, official knowledge confirmed on Tuesday.

The Workplace for Nationwide Statistics stated unemployment stood at 3.5 per cent — 0.3 share factors down on the quarter and the bottom since 1974 — as a consequence of a recent rise in financial inactivity.

Nevertheless, the figures additionally confirmed latest survey proof {that a} red-hot labour market is beginning to cool as each employers and employees fear concerning the results of sky-high inflation and rising borrowing prices.

Employment fell within the three months to August for the primary time for the reason that disruption of Covid-19 lockdowns eased, as a worsening financial outlook started to weigh on hiring.

The employment price was 75.5 per cent, 0.3 share factors decrease than the earlier quarter and a full share level decrease than earlier than the pandemic.

The ONS famous that this adopted 1 / 4 during which the employment price had been unusually excessive and inactivity unusually low, suggesting the underlying change within the financial system is perhaps much less.

Nevertheless, the variety of vacancies fell for a 3rd consecutive quarter — at its sharpest price since mid-2020 — though it stays close to historic highs, with extra job openings than there are unemployed individuals on the lookout for work.

The figures held little comfort for financial policymakers, who’re involved that wage pressures will stay sturdy even because the financial system slows, as a result of so many individuals have dropped out of the labour market for the reason that begin of the pandemic.

The newest figures confirmed no let-up on this pattern, with inactivity price up by 0.6 share factors on the quarter to 21.7 per cent, pushed by long-term illness amongst older employees and by college students who weren’t working or job searching.

Samuel Tombs, on the consultancy Pantheon Macroeconomics, stated the figures gave reassurance that employment was “not in freefall” but in addition that wage development was nonetheless too sturdy for the Financial institution of England to tolerate.

Earnings fell in actual phrases at near-record charges, because the surge in inflation ate into family incomes. However the ONS stated nominal wage development was the quickest on document, outdoors the Covid interval when the figures have been distorted. Development in common weekly earnings, together with bonuses, strengthened to six per cent — with even sooner development within the non-public sector, and public sector employees lagging far behind — whereas common earnings grew 5.4 per cent.

UK chancellor Kwasi Kwarteng stated the figures confirmed that “the basics of the UK financial system stay resilient, with unemployment at its lowest level for nearly 50 years”.