UK employment at all-time high – job vacancies hit record

Employment in the UK reaches a peak of 32.2 million as job vacancies continue to rise. Meanwhile, wages continue to rise but fail to prevent continuing squeeze on real wages.

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The number of people in employment in the UK unexpectedly hit an all-time high in the quarter to November amid continuing strong demand for workers, official figures showed.
The Office for National Statistics (ONS) said more than 32.2 million were in work in the three months, an increase of 102,000 on the previous quarter and the highest total since records began in 1971. The 75.3 per cent employment rate was also a record high.

Job vacancies continue to hit record numbers

Over the quarter, the number out of work fell by 3,000 to 1.44 million, which was 160,000 lower than a year earlier and represented an unemployment rate of 4.3 per cent, the lowest in 40 years. Meanwhile, the number of job vacancies also set a record, increasing by 17,000 to 810,000.David Freeman, ONS statistician, said, “With the employment rate returning to a joint record high and the number of vacancies setting a new record, demand for workers clearly remains strong. Moreover, economic inactivity is at its lowest since the winter of 2000-01.”

Wage increase in the UK gains pace

A 2.4 per cent rise in wages, excluding bonuses, represented the fastest increase in a year, although the rate remained below the 3.1 increase in the annual inflation rate recorded in November.Work and Pensions Secretary Esther McVey commented, “We had a record-breaking 2017 for employment, and I’m delighted to see this trend continue as we enter the new year. The number of people in work is at an all-time high and the unemployment rate has not been this low for over 40 years.“At this time of year, straight after Christmas, people might be feeling a squeeze on their finances. We’re determined to help people keep more of what they earn.“That’s why we’ve increased the national living wage, introduced Universal Credit to offer greater flexibility, and taken millions of people out of income tax altogether by raising the tax-free personal allowance.”
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Strength of sterling

The ONS figures helped boost the value of sterling on international markets to its highest level since the day of the referendum on European Union membership 18 months ago.Neil Wilson, senior market analyst at ETX Capital, commented, “Sterling breached $1.41 to record another post-Brexit high as a renewed bout of dollar softness and some better-than-expected employment numbers fuelled bids. Strong employment numbers were just the nudge the pound needed to get over $1.41, where it is just about holding at present.“After showing signs of a slowdown, there was a strong bounce back in employment in December. Wage growth ex-bonuses rose by 2.4 per cent compared to 2.3 per cent in the quarter to October. Although below inflation at the present there are signs that tentatively rising wage growth will converge with falling inflation in the coming months. “Sterling’s recovery will only aid that process and is a reason to be more bullish on the UK economy and sterling.”

Real wages continue to be under pressure

Ben Brettell, senior economist at Hargreaves Lansdown, said, “With pay growing at 2.5 per cent (including bonuses) and inflation running at 3.0 per cent, the squeeze on real wages continues for the ninth consecutive month. But with inflation seemingly set to fall back towards the two per cent target, this looks like it’ll come to an end in the next few months.“We should remember, however, that the only true driver of real pay growth and rising living standards is productivity growth. This is something the UK has struggled with since the financial crisis, and as yet nobody seems to have solved the puzzle.Suren Thiru, head of economics at the British Chambers of Commerce, added, “While it is encouraging that regular earnings growth picked up slightly, subdued economic conditions are likely to weigh on wage growth over the next year. As a consequence, pay growth is likely to remain stubbornly below price growth over the near term, dampening consumer spending, a key driver of UK GDP growth.”
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