UK Employment Highest Since 1971; Jobless Rate At 44-year Low

05:12, 19th March 2019

(RTTNews) - UK employment level climbed to a record high in the three months to January, while the jobless rate eased to its lowest level since the mid-1970s, as the labor market shrugged off the chaos caused by the uncertainties linked to Brexit.

Employment grew by 222,000 persons to a record 32.71 million in the three months to January, preliminary data from the Office for National Statistics showed on Tuesday. Economists had forecast an increase of 120,000.

This was the largest rolling quarter-increase since the period September to November 2015, the ONS said. This is in contrast with the recent weakness in gross domestic product growth, especially given that real wages growth rates have been rising, the agency added.

The employment rate of 76.1 percent was the highest since the series began in 1971.

The unemployment rate eased to 3.9 percent. The rate has not been lowest since the three months to January 1975, the ONS said. Economists had expected the figure to remain unchanged at 4 percent.

The inactivity rate hit a record low 20.7 percent in the quarter to January.

Average weekly earnings excluding bonuses grew 3.4 percent annually in the three months to January, which was slower than the revised 3.5 percent in the three months to December. Economists had expected the rate to remain unchanged at December's original 3.4 percent.

Pay including bonuses rose 3.4 percent annually, same as in December. Economists had expected the pace of increase to slow to 3.2 percent.

Vacancies remained high suggesting a tightening labor market. The recent surge in employment could have been due to the firms boosting hiring ahead of Brexit.

In the three months to January, there were 863,000 unfilled vacancies and 1.34 million unemployed people. The number of unemployed per vacancy was 1.6 during the period.

A tightening labor market can pose problems for recruiters due to a shortage of new recruits, the ONS said. This can also lead to pressure for wages to rise and attract more people to the labor market.

"UK labor data looks astonishingly strong for an economy that is supposedly slowing on most other measures," ING economist James Knightley said.

"If the government gets a long Brexit extension, a Bank of England rate hike is clearly on the table for the summer."