Britain's unemployment rate remains at a 42-year low, official data showed today, but workers' wages are still being eroded by inflation.
Britain’s unemployment rate remains at a 42-year low, official data showed today, but workers’ wages are still being eroded by inflation. The jobless rate — or the proportion of the workforce that is unemployed — stood at 4.3 percent in the three months to the end of October, the Office for National Statistics (ONS) said in a statement. That was unchanged from the three months to September, and the lowest rate since 1975.
Average weekly earnings rose by 2.5 percent year-on-year in the three-month period to October, but lagged behind Britain’s annual inflation rate of 3.1 percent.
Adjusted for inflation, workers’ weekly earnings fell 0.4 percent year-on-year from August to October — a further erosion of purchasing power. Britain’s Consumer Prices Index 12-month inflation rate hit a near six-year high last month, fuelled by the rising cost of air fares, computer games and recreational goods, the ONS revealed on Tuesday.
Inflation has soared in 2017 as a Brexit-hit pound ramps up import costs, which led the Bank of England to raise its key interest rate for the first time in a decade last month. “The consumer squeeze which has been evident since last year’s referendum continues, as pay adjusted for inflation is still falling,” noted Hargreaves Lansdown economist Ben Brettell.
Sterling tumbled in the wake of last year’s shock Brexit referendum, while Britain is on course to leave the European Union in March 2019. Some 1.4 million people were unemployed at the end of October. That was down 26,000 on a year earlier. The BoE is expected Thursday to leave borrowing costs at 0.50 per cent following its final monetary policy committee (MPC) meeting of 2017. “The tight squeeze on consumers continues as earnings growth remains clearly below inflation,” noted Howard Archer, chief economic advisor at the EY ITEM Club research group.
“It is a nailed-on certainty that the Bank of England will keep interest rates unchanged at 0.50 percent on Thursday. “Following consumer price inflation rising to 3.1% in November, pay still only creeping up in October and the labour market showing signs of faltering, dilutes the case for the Bank of England to hike interest rates again in the near term.”
The MPC had last month voted 7-2 to ramp up interest rates to 0.50 percent from a record low of 0.25 percent in order to tackle high inflation. That was the first BoE hike since before the financial crisis, when the rate was ratcheted up as high as 5.75 percent in July 2007.