The number of people in work has reached another high and wages are growing at their fastest pace since the Brexit referendum despite a slowdown in the economy.
The Office for National Statistics said 32.71 million were now in employment, after a rise of 179,000 people in the three months to the end of February, the highest since 1971. Unemployment fell by 27,000 to 1.34 million, putting the rate at 3.9 per cent, the lowest level since 1975.
In explaining the robust performance of the labour market, economists pointed to the flexibility of the British labour market. It is easier and cheaper to recruit workers to meet demand than to commit to extra business investment, which has been falling.
According to the latest figures, the growth in employment was mainly driven by an increasing number of women entering the labour market. The economic inactivity rate for women fell to 25.3 per cent during the period, the joint-lowest figure since records began in 1971. The number of economically inactive students also fell by 38,000 and the number of people opting out of the labour market to “look after family” declined by 40,000.
Even though a record number of people are now in work, the annual rate of employment growth slipped in the three months to February to 1.4 per cent, from 1.5 per cent in the previous quarter when 222,000 extra jobs were created.
Economists warned that the record-breaking period of employment growth could be coming to an end.
Andrew Wishart, UK economist at Capital Economics, the consultancy, said: “Although the labour market was unable to repeat last month’s emphatic performance, employment growth was still a solid 179,000 in the three months to February. We suspect that this could mark the peak of employment growth as the Brexit uncertainty reached its crescendo.”
Matt Hughes, deputy head of labour market statistics at the ONS, said: “The jobs market remains robust, with the number of people in work continuing to grow. The increase over the past year is all coming from full-timers, both employees and the self-employed.
At 76.1 per cent, the employment rate is the highest for 48 years and the tightness of the labour market is driving a period of sustained pay growth. Average weekly earnings, including bonuses, increased by 3.5 per cent in the year to February, with wages continuing to outpace inflation. After adjusting for inflation, wages grew by 1.6 per cent, the fastest rate since July 2016.
Although wages have been outstripping inflation for several month now, the Resolution Foundation said that, at £529, average weekly total pay was £12 lower than before the referendum.
Stephen Clarke, an economic analyst at the foundation, said: “Real wage growth has finally returned to pre-referendum levels, though the post-referendum pay slump has left us £12 a week poorer. This mini pay recovery is encouraging, but it is likely to be tested in the coming months as inflation is expected to start rising again.”
Alok Sharma, the employment minister, said: “ The UK jobs market continues to go from strength to strength, proving the underlying resilience of the British economy.”