United Kingdom: Wage growth highest since 2008; unemployment rate remains low
December 11, 2018
In the August-October period the unemployment rate remained at a near multi-decade low of 4.1%. Employment rose by 79,000 compared to May-July, on the back of more full-time positions offsetting a fall in part-time positions, a pattern which has been common in recent months. Employment growth was notably stronger than markets had expected following several months of soft employment readings, and comes despite heightened Brexit uncertainty. The employment rate was the joint-highest since comparable records began in 1971.
As a result of the tight labor market and associated worker shortages, wage pressures intensified further in August-October, with nominal earnings growth excluding bonuses hitting 3.3%—the highest rate since 2008—thanks to faster private-sector pay growth.
Looking ahead, wages should continue to be supported by hiring difficulties, the high vacancy rate and more generous public-sector pay agreements. On the employment side, despite the positive figure in August-October, job growth could be subdued in the coming months as the UK edges closer to leaving the EU without an agreement.
Author: Oliver Reynolds, Economist