UK unemployment rate plummets to lowest since April 2008

The UK unemployment rate fell to a seven-year low of 5.3 per cent in the three months to September, new figures show — the lowest jobless rate since the second quarter of 2008, according to the Office for National Statistics (ONS) said. 

The number of people in employment rose by 177,000 over the quarter, taking the employment rate to 73.7 per cent — the highest since records began. The number of unemployed fell by 103,000, the biggest quarterly fall for a year, while annual wage growth also slowed to 2.5 per cent in the quarter.

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Gerwyn Davies, Labour Market Analyst at the CIPD, the professional body for HR and people development, said: “Today’s jobs figures, showing further increases in the number of people in work and equally sharp falls in the claimant count, will cheer the Chancellor of the Exchequer ahead of his Autumn Statement later this month. In addition, signs that wage pressure is moderating against the backdrop of historically low levels of inflation strengthens the Bank of England case for not hiking in interest rates in the next few months, despite unemployment falling to a seven-year low.

 “Harsh critics might point out that a relatively large proportion of the jobs are part-time.  However this follows a period of strong growth in full-time employment. Against the backdrop of its net migration target and the EU debate, the only potential worry for the government perversely is the sharp increase in the number of non-UK nationals in employment. The increase is driven by non-UK nationals from the EU that now make up two million of the UK workforce for the first time. 

“However, this development should also be celebrated. CIPD research shows that employers have headed off the threat from skills shortages by hiring more young people, upskilling the existing workforce and turning to migrant workers.  This may explain why pay pressures have not increased, which has supported stronger employment growth and eased any pressure on the Bank of England to raise interest rates at a time when the global economy is showing signs of cooling down. Even though pay pressures have eased, the rate of earnings growth comfortably exceeds price inflation, although there is still plenty of ground to be made up after several years of earnings going up by less than prices.”

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