Unemployment falls to its lowest level in 43 years
The latest official figures have shown unemployment falls to its lowest level in 43 years.
Estimates within the latest ONS Labour Force Survey for August 2018 show that, between January to March 2018 and April to June 2018, the number of people in work in the UK increased and the number of unemployed people fell.
However, the number of people aged 16 to 64 years old who are not working and not seeking or available to work, and are therefore economically inactive, increased.
According to the official figures, there were 32.39 million people in work, which is 42,000 more than in January to March 2018. The number of people working has risen by 313,000 compared to a year earlier.
When measured as a proportion of people aged from 16 to 64 who were in work, the employment rate was 75.6%. This is unchanged compared with January to March, but higher than a year earlier when it stood at 75.1%.
The ONS reported that there were 780,000 people in employment on ‘zero-hours contracts’ in their main job. This was 104,000 fewer than a year earlier, which shows how a media and political backlash against zero-hours contracts is having an impact on this type of employment.
There were 1.36 million unemployed people, defined as people not in work but seeking and available to work. This was 65,000 fewer than for January to March 2018 and 124,000 fewer than for a year earlier.
The unemployment rate – the number of unemployed people as a proportion of all employed and unemployed people – was 4.0%. It has not been lower since December 1974 to February 1975.
The figures also show that there were 8.73 million people aged from 16 to 64 years who were economically inactive (not working and not seeking or available to work). This was 77,000 more than for January to March 2018 but 31,000 fewer than for a year earlier.
The economic inactivity rate (the proportion of people aged from 16 to 64 years who were economically inactive) was 21.2%, higher than for January to March 2018 when it stood at 21.0%, but slightly lower than a year earlier, when it stood at 21.3%.
In terms of wages, the latest estimates show the average weekly earnings for employees in nominal terms (so not adjusted for price inflation) increased by 2.7% excluding bonuses. When bonuses are included, average weekly earnings increased by 2.4% compared with a year earlier, again in nominal terms.
In real terms, where these average weekly earnings were adjusted for price inflation, the increases were 0.4% and 0.1% respectively.
Commenting on the figures, Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, said:
While there is little evidence of any let-up in the UK economy’s ability to create jobs, this is not yet translating into faster pay growth.
On the one hand we find ourselves in the welcome situation in which unemployment continues to fall, propelled by moves into employment by younger workers. There was also the first noticeable decline in zero-hours-contracts. However, while the unemployment rate continues to fall to near-historic lows, inactivity has ticked up and pay growth appears stubbornly stuck at levels far below those before the crisis.
The result is a labour market that appears fundamentally different to that which existed before the crisis.
Melanie Baker, Senior Economist at Royal London Asset Management, said:
There was some welcome news for households in today’s labour market report, with further falls in unemployment. However employment growth slowed and, over the next few months, we’ll be watching for signs that UK firms are pressing pause on both investment and hiring, as Brexit approaches.
Brexit remains the main focus for the economy over the coming months, with the outcome of negotiations likely to influence various areas, including employment growth and interest rates.