LONDON (BLOOMBERG) - United Kingdom unemployment declined and a measure of the number of people in work rose to a record, pushing the labour market closer to "full capacity," according to the statistics office.
The number of jobless fell 7,000 in the fourth quarter to 1.6 million people, leaving the unemployment rate at 4.8 per cent, the lowest in more than a decade. Employment increased by 37,000 to 31.8 million, and the rate rose to a record 74.6 per cent, the Office for National Statistics said on Wednesday.
Despite labour shortages in some areas, firms told Bank of England agents recently they expect wage growth to slow to about 2.2 per cent this year. While employment is still rising, the pace has cooled over the past year, and uncertainty as Britain prepares to begin talks to leave the European Union is expected to take a further toll on hiring. BOE officials now believe there is more slack in the labor market than previously thought, which should keep a lid on wage demands.
The latest labour data showed basic pay growth slowed in the quarter to 2.6 per cent from 2.7 per cent, weaker than economists had forecast. Growth in total pay also slowed, in part reflecting the timing of bank bonuses. The pound weakened against the US dollar after the data were released and was at US$1.2428 as of 9:35 a.m. London time, down 0.3 per cent on the day.
With inflation accelerating, that's eating into real-pay growth, which at 1.4 per cent in the last three months of 2016 was the weakest since the start of 2015.
The ONS data also said that the claimant count - a narrower measure of unemployment - plunged 42,400 in January after a revised 20,500 drop in December. That office said changes to Universal Credit benefits mean the data can be volatile from month to month.