The unemployment rate fell to 6.4 per cent in the three months to the end of June, with the number of people out of work falling by 132,000 to 2.08 million, the lowest since late 2008, according to the Office for National Statistics (ONS).
However, average weekly earnings were only 0.6 per cent higher than a year earlier, the lowest since records began in 2001 and lower than June’s 1.9 per cent inflation figure. In fact, including bonuses, wages actually fell by 0.2 per cent, the first fall since 2009.
According to the ONS, average wage rises were affected by an unusually high number of employees deferring bonus payments until after the top rate of tax was cut from 50p to 45p last year, which have skewed year-on-year comparisons but the fall was still a matter of concern for policymakers.
Interestingly, around 40 per cent of the increase in employment levels over the past year was among people who were not born in the UK, although the figures show that the number of indigenous workers rose by 502,000.
Meanwhile, the number of people claiming Jobseeker’s Allowance fell for the 21st consecutive month in June, to 1.01 million and if the trend continues next month, the figure will fall below one million for the first time since September 2008.
The statistics, particularly surrounding wages, will have a bearing on the timing of any interest rate decisions, as low average wage rises are an indication of the level of the UK’s ‘spare capacity’.
This is the Bank of England’s measure of how well the economy is performing, so if there is too much spare capacity, rates won’t rise, making it likely, given these figures, that they will stay where they are for the rest of this year.
