Britain's jobless rate falls to 11 year-low, benefit claims rise

LONDON (REUTERS) - Britain's unemployment rate fell in the first three months after the Brexit vote to its lowest level in 11 years but there were some signs that a slowdown in the labour market could be coming.

The unemployment rate edged down to 4.8 per cent in the July-September period. But the number of people in work rose by 49,000, the slowest increase since the three months to March this year, the Office for National Statistics said.

"Unemployment is at its lowest for more than 10 years, and the employment rate remains at a record high," ONS statistician David Freeman said in a statement. "Nonetheless, there are signs that the labour might be cooling, with employment growth slowing."

Britain's economy weathered the initial shock of the Brexit vote in better shape than the Bank of England and almost all private economists expected.

However, unemployment is widely expected to rise as companies wait for more clarity on the country's future ties to the European Union, which could take years to emerge.

The BoE expects the unemployment rate to stand at 5.6 per cent in two years' time and a survey of employers published on Monday by the Chartered Institute of Personnel and Development (CIPD) showed companies cutting back on hiring plans in late 2016.

The number of people claiming unemployment benefits in October rose by 9,800, the biggest rise since May, the ONS said, adding its measure of claimants had been revised up to take into account changes to the benefit system.

September's claimant count increase was revised up to 5,600 from a previous reading of 700.

The ONS said workers' total earnings including bonuses rose by an annual 2.3 per cent, unchanged from their pace in the three months to August.

Excluding bonuses, earnings rose by 2.4 per cent year-on-year, the fastest increase in a year and in line with expectations in the Reuters poll. The CIPD survey showed employers expected to make basic pay settlements of just 1.1 per cent in 2017, putting a squeeze on living standards as inflation is expected to rise to around 3 per cent or more after the recent fall in sterling.

There were also signs that rising inflation is taking its toll on living standards, as real wages grew just 1.7 per cent in the third quarter, matching the slowest rate since February 2015.

A cooling jobs market and rising prices threaten to undermine consumer spending, which has driven almost four years of economic expansion. Uncertainty as Britain negotiates its split from the European Union is expected to hit hiring and investment, making it hard for workers to negotiate significant pay increases.