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Economists hail employment data as ‘welcome news’ for new Government

UK unemployment hit its lowest level since 1975 in the quarter to October, according to the Office for National Statistics.

Prime Minister Boris Johnson holds his first Cabinet meeting following the general election in Downing Street (Matt Dunham/PA)
Prime Minister Boris Johnson holds his first Cabinet meeting following the general election in Downing Street (Matt Dunham/PA)

By Henry Saker-Clark, PA City Reporter

Economists have hailed the latest set of employment statistics as “welcome news” for the new Conservative Government as it revealed a “resilient” UK labour market.

The Office for National Statistics said unemployment fell lower during the three months to October as the labour market performed stronger than analysts had initially forecast.

The number of unemployed people in the UK decreased by 13,000 to 1.28 million for the quarter, it confirmed on Tuesday morning.

Economists said the fall in unemployment and increase in hiring by British businesses will help to drive optimism given the turbulent economic and political backdrop.

While modest, the renewed firming in the labour market is somewhat surprising and certainly resilient Howard Archer, EY Item Club

Howard Archer, chief economic adviser for the EY Item Club, said: “There is some welcome news for the UK economy as the latest labour market data are firmer overall after recent softening.

“While modest, the renewed firming in the labour market is somewhat surprising and certainly resilient – given a struggling UK economy and recent heightened domestic political and Brexit uncertainties.

“The labour market has undoubtedly been helped by businesses preferring to employ rather than commit to investment, given current heightened uncertainties and the fact that employment is relatively low cost and easier to reverse if business subsequently stalls.”

Mr Archer is also among a number of financial analysts who said the figures “ease pressure” on the Bank of England in the near term, suggesting it could now be more likely to leave monetary policy unchanged.

Yael Selfin, chief economist at KPMG UK, said: “Figures out today show demand for workers was in full swing in the run-up to the earlier Brexit deadline of October 31, with the labour market remaining extra tight, and the unemployment rate below the Bank of England’s comfort level.

“The continued rise in vacancies signals that the tightening of the labour market has likely reached a plateau for now, and together with the recent rise in sterling, will give the Bank of England some comfort as it judges inflationary pressures in the pipeline.”

However, there was a note of caution from some economists, who highlighted that wage growth significantly slowed down during the period while job vacancy numbers also declined.

The UK’s slowing economy has started to hit workers’ pay, reminding us that the labour market cannot be divorced from wider developments Nye Cominetti, Resolution Foundation

Total pay only increased by 3.2% in the three months to October, down from 3.6% a month earlier, according to the new figures.

Nye Cominetti, economic analyst at the Resolution Foundation, said: “The UK’s slowing economy has started to hit workers’ pay, reminding us that the labour market cannot be divorced from wider developments.

“Remarkably, British workers are reaching the end of the decade with their pay packets stretching no further than they did at the end of the last decade.”

Work and Pensions Secretary Therese Coffey said: “At the end of this decade, I am delighted to see that more people are benefiting from rising wages and record high employment.

“Six out of the nine UK regions have seen an increase in the number of people in work in the last year and I want to see it continue to rise in every part of the country.

“As we head into 2020, I’m clear that the focus of this Government is on levelling up opportunities and aspiration across the entire United Kingdom.”

PA

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