Britain’s unemployment rate has fallen to its lowest level in more than ten years, according to official figures that were seized on by campaigners from both sides of the EU debate.
The final set of job numbers before next Thursday’s referendum showed an unexpected fall in the jobless rate from 5.1 per cent to 5 per cent in the three months to April, reaching the lowest level since October 2005. The employment rate remained at its record high of 74.2 per cent.
Economists noted that while the numbers suggested that employers were taking on new workers at robust levels, the data only goes up to April, so it may be too early to tell whether Brexit jitters have affected the labour market.
“We will know the result of the referendum before we see what impact the uncertainty had on the actual job numbers,” said Alan Clarke, an economist at Scotiabank. The pound rallied against the dollar after the figures were released, with sterling bouncing back from two-month lows.
One particular bright spot in April’s figures was wage growth, which has remained stubbornly low since the financial crisis. Regular average wage growth, excluding bonuses, rose from 2.2 per cent to 2.3 per cent, while total wage growth rose 2 per cent. Analysts said the rise was probably due to the national living wage, which came into effect in April. At £7.20 an hour, the minimum wage is one of the highest in Europe.
However, Chris Williamson, chief economist at the financial information services company Markit, said: “Recruitment companies have reported that although the introduction of the national living wage has pushed average wage rates higher, the increase in staff costs has also led to a pullback in hiring at some firms.
“Slower economic growth and rising uncertainty may also have hit hiring in recent months, suggesting the labour market data for May and June may disappoint,” he added.
Analysts said the rate at which companies took on new workers appeared to have started slowing. Employment rose by 55,000 in the three months to April compared with 200,000 in the previous quarter. The number of people who registered as self-employed rose significantly and drove much of the rise in employment.
John Philpott, director of the Jobs Economist think tank, said: “The UK private sector effectively stopped hiring in the spring. Employees account for just 5,000 of the 55,000 increase in total employment in the three months to April, almost all of which is due to a rise in self-employment.”
Ruth Miller, UK economist at Capital Economics, said that while there had been a slowdown in recruitment “some easing in the pace of the jobs recovery from its previous strength was always to be expected”. She said this was partly due to “how remarkable the labour market recovery has been over the past few years” and how little slack was left in the jobs market.
The figures also revealed that the number of non-UK nationals working in Britain had increased by 229,000 to 3.34 million. The proportion of non- nationals among people working in the UK has risen from 3.5 per cent in 1997 to 10.6 per cent.