UK employment sees biggest fall since 2015

Unemployment has continued to fall

By John-Paul Ford Rojas, Business Reporter

The number of people in work has fallen by the most in more than two years while wage growth has slipped further behind the cost of living, official figures show.

Employment fell by 14,000 to just over 32 million in the three months to September, according to the Office for National Statistics (ONS)

That was despite a continued fall in joblessness, explained by the fact that the number of people classed as economically inactive – meaning they are not seeking or available to work – rose.

Economists said it could mean sluggish growth in the wider economy was starting to hold back job creation, though the ONS cautioned against reading too much against one quarter's data.

Meanwhile, the figures also showed pay growth excluding bonuses remained at a below-inflation 2.2%

That meant pay in real terms – when taking into account inflation – dropped by 0.5%, the seventh month in a row of decline.

Wages have been rising above the rate of inflation since 2014
Pay growth has been lower than the rise in the cost of living for several months

The gap has widened from 0.4% recorded the previous month as the rise in the cost of living accelerated.

The figures cover a period which saw inflation climb to a five-year high of 3%.

The unemployment rate, at 4.3%, remained at its lowest level since 1975. The jobless total fell by 59,000 to 1.42 million.

There was also some encouragement from separate ONS figures that showed 0.9% growth in productivity in the third quarter, the best rate since 2011.

Improving productivity – doing more with less – is seen as a key factor in making the economy stronger but the UK has struggled to do this recently, recording declines in the previous two quarters.

Economists expressed concern about the employment fall, saying it could reflect the slowdown in wider growth this year.

James Smith, economist at ING Bank, said: "A bout of weakness in the jobs market suggests slower economic growth may be starting to take its toll."

Howard Archer, economist at the EY ITEM Club, said: "A fall in employment over the quarter suggests that persistent lacklustre economic growth and appreciable economic and Brexit uncertainties may be starting to rein in the labour market's strength."

HSBC economist Chris Hare said if the trend continued it "might chip away at the case" that interest rates need to rise further in order to keep a lid on inflationary pressures.

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