London - The UK labour market
displayed unexpected resilience in the three months through November as
employment jumped and wage growth ticked higher.
The number of people in work rose 102 000 to a record high, confounding market expectations that employment would fall. Basic pay growth quickened to 2.4%, the highest in almost a year, though it still lags well behind the rate of inflation.
The positive news could push more proactive policy makers at the Bank of England (BoE) towards voting for another increase in interest rates.
The amount of slack in the labour market is central to the debate at the central bank, where officials raised the benchmark rate for the first time in a decade in November amid concern that poor productivity had lowered the economy’s “speed limit.”
The BoE will announce its next policy decision on February 8, alongside new growth and inflation forecasts as well as an analysis of the supply side of the economy.
Unemployment fell by 3 000 during the period, leaving the jobless rate at a 42-year low of 4.3%, the Office for National Statistics said on Wednesday. Inactivity dropped to its lowest since the winter of 2000 to 2001 and there were a record number of vacancies.
“Demand for workers clearly remains strong,” said ONS statistician David Freeman.
The pound briefly extended an advance against the dollar after the data, and was 0.7% higher at $1.4097 as of 11:34. It earlier touched $1.4119, the highest since the night of the Brexit referendum in June 2016.
Surveys suggest firms are facing growing recruitment difficulties and BoE policy maker Michael Saunders said last week that unemployment could drop below 4% this year and underlying earnings growth accelerate to 3% or above.
Single-month figures show employment rising by 505 000 in November alone, the biggest increase since September 2013. The increase in the latest three months was driven by full-time employees.
The question is whether the labour market will come under pressure as the economy loses momentum, with the UK forecast to join Italy and Japan at the bottom of the Group of Seven growth league this year.
Britain is preparing to leave the European Union in just over a year and real earnings are continuing to decline, with
inflation currently running at 3%.
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