United Kingdom: Unemployment rate drops to a fresh multi-decade low in March, but real wages fall
May 17, 2017
UK jobless claims rose by 19,400 in April according to the Office for National Statistics (ONS), contrasting the revised 33,500 rise observed in the previous month (previously reported: 25,500 increase) and coming in above analysts’ expectations.
The unemployment rate—derived from a different survey—was 4.6% in March (the latest period for which data is available), reaching a new multi-decade low. The UK labor market is in rude health, and has so far shrugged off the uncertainty generated from last year’s EU referendum and an economic slowdown in Q1. Encouragingly, the number of people who are economically inactive also dipped, showing the fall in the unemployment rate isn’t simply a reflection of workers abandoning the jobs market.
However, despite record low unemployment, real wage growth has petered out entirely. According to the ONS, real regular pay excluding bonuses fell 0.2% in Q1 year-on-year, the lowest figure since 2014, likely linked to poor productivity growth and the continuing existence of economic slack. With inflation reaching a fresh multi-year high in April, this doesn’t bode well for consumers’ purchasing power going forward.
Author: Oliver Reynolds, Economist