According to the Office for National Statistics, unemployment in the UK is now at the lowest level for 45 years, hitting its lowest level since 1974, though wage growth softened slightly. The figures revealed that the number of people out of work in the past three months has now been falling for five years, and now the country's unemployment rate edged lower to 3.8 per cent in the three months to March. In the three months to February, the unemployment rate was 3.9%. The employment rate hit a record high of 76.1 per cent as employment jumped by 99,000 to 32.7 million. The buoyant figures show the strength of Britain's job market despite the Brexit paralysis and seemingly unending deadlock at Westminster.
Helped by changes to the state pension age, which has resulted in fewer women retiring between the ages of 60 and 65, the proportion of women in work was higher than since records began in 1971. Over the last five years, the unemployment rate for women has fallen from 6.4% to 3.7%, in comparison to a fall from 7% to 3.9% witnessed in the unemployment rate for men. The participation rate of women has seen a cultural change as fewer women are now out of work for family reasons, reflecting higher wages and older workers into the workplace.
After an almost uninterrupted decline since the end of 2017, the number of EU nationals in work also rose to nearly 2.4m, a record high.
However, there are signs that the job market's resilience could be fraying with signs of market softening, as some indicators suggest that it is entering a turbulent period. The number of jobs added in the first quarter of the year was lower than the number added in the three months to February and below the market expectations. Compared with the previous quarter, the number of full-time employees dropped by 55,000, though the number of self-employed increased. Nominal earnings growth saw an end to the upward trend that began last year as it eased to 3.2 per cent, compared to 3.5 per cent in the three months to February, showing signs of at least temporarily slipping back after trending up. Moreover, if look at real earnings, it is still below their pre-financial crisis peak, though wages are rising close to their highest rates since the crisis more than a decade ago.
Though the number of vacancies remained higher than in the first quarter of last year, it fell in the three months to March, compared with the three months to January, indicating another sign that the job market could be softening. As companies continued to hire despite weak output growth, the productivity growth also fell for the third consecutive quarter.
Since employment is relatively low cost and it is easier to fire employees if business subsequently stagnates, growth in employment reflects preference by companies to employ rather than commit to long-term investment given current macro uncertainties. Analysts believe the Bank of England would maintain a wait-and-see approach on interest rates and is not expected to change its monetary policy imminently.
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