Unemployment falls to new low but wages remain squeezed
UNEMPLOYMENT tumbled to a new 42-year low in July, with more Britons than ever before in work.
Private and public hiring picked up in the three months to July with employment rising by 181,364, the fastest pace of jobs growth since 2015. More than 31.2m people are now in work, while joblessness dropped to 1.46m, or 4.3pc – a low not seen since mid-1975.
Employers appear keen to keep on hiring as the Office for National Statistics found 774,000 vacancies in August, a modest rise on the month.
The number of public sector workers also rose for the first time in a year to 5.44m.
That result in jobs comes despite the slowing rate of economic growth, and has been accompanied by unexpectedly low pay rises. Average weekly pay is up by just 2.1pc on the year to July.
Workers in the private sector earn an average of £503 a week, up 2.2pc on the year, while those in the public sector received £512 a week, a rise of 1.5pc.
Over the same period prices rose by 2.6pc and picked up further in August, meaning workers are getting worse off in real terms. Stephen Clarke, policy analyst at the Resolution Foundation said: “There is a risk that the pay squeeze could get worse before it starts to gets better. Unless things improve we could be looking at 15 years of lost pay growth.”
As a result, the Bank of England faces a conundrum in its interest rate decision to be published today. Officials had expected wage inflation would take off when joblessness fell to under 4.5pc, which would enable policymakers to start raising rates.
But that has not yet happened, pushing Mark Carney to keep rates on hold at 0.25pc. The drop in unemployment has been spread across most of the UK, but north-east and south-west England both suffered rises.
Mark Carney, the Governor of the Bank of England, has an interest rate conundrum