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United Kingdom Unemployment March 2019

United Kingdom: Unemployment rate dips in the first quarter, but wage growth slips

In the January-March period, the unemployment rate fell to a new multi-decade low of 3.8%, while the employment rate was the joint-highest on record. That said, employment growth came in below market expectations at 99,000—potentially a sign of Brexit uncertainty weighing on hiring decisions—while nominal earnings growth excluding bonuses dipped for the second consecutive rolling quarter.

Looking ahead, despite the recent drop-off, nominal wage growth should continue to comfortably outpace inflation. In its May Inflation Report, the Bank of England penciled in 3% growth in total pay for 2019. Coupled with low unemployment, this should support private consumption.

James Smith, an economist at ING, sounds a note of caution: “there are some early warning signs emerging from the jobs market. Employment growth has slowed since the start of the year, which tallies with various survey indicators that have hinted at reduced appetite to hire […]. Meanwhile, the number of people on the unemployed claimant count has been gradually rising.”

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