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16 Nov 2016

Unemployment in UK plummets to 11-year low

New figures reveal that UK unemployment plummeted to an 11-year low in September this year, the BBC website reports.

According to data from the Office for National Statistics, unemployment in the UK dropped by 37,000 in the three months leading up to September 2016, reaching 1.6 million.

The jobless rate also fell to less than 5% during this time, and the number of people in work rose by some 49,000. Meanwhile, average weekly earnings increased by 2.3% (including bonuses) throughout the months leading up to October, and 2.4% excluding bonuses.

The ONS has highlighted that these figures represent the lowest unemployment rate since the three months leading up to September 2005 - two years before the global economic crash. Furthermore, the total number of individuals in jobs maintained a record high of 31.8 million.

However, despite these positive numbers, forecasts from financial experts and the Bank of England suggest that unemployment is due to rise again following continuing uncertainty surrounding Brexit.

Commenting on the findings, ONS statistician David Freeman warned that although unemployment “is at its lowest for more than 10 years and the employment rate remains at a record high […] there are signs that the labour market might be cooling, with employment growth slowing.”

It was also noted by analysts that the pace of jobs growth was tailing off, most likely as a result of Britain´s vote to leave the EU. Ruth Gregory, a UK economist at Capital Economics, stressed that the Leave vote “is starting to sap the jobs recovery of its previous strength.”

“Employment growth slowed sharply - with the 49,000 rise in the three months to September down from August´s 106,000 and well below the consensus forecast of 91,000,” she added.

Meanwhile, the British Chambers of Commerce noted that Brexit was “dampening firms´ recruitment intentions,” which would in turn will put “increased pressure on UK employment levels”.

Its head of economics, Suren Thiru, predicted that “subdued labour market and economic conditions are also expected to keep a lid on wage growth over the next year, despite higher than expected levels of inflation.”

Copyright M2 Bespoke 2016

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