UK employment reaches record high as unemployment lowest since 1975

The level of people in employment in the UK reached a new record high in the first quarter of the year as unemployment reached its lowest since 1975.

Unemployment in the UK fell to 4.6 per cent in the first quarter, according to the Office for National Statistics (ONS).

The total proportion of people employed in the UK, known as the employment rate, reached a record 74.8 per cent during the same period, with the number of job vacancies in the three months to April also reaching a new record of 777,000.

In the three months to February, the employment rate for people was 74.6 per cent, the previous joint highest since comparable records began in 1971.

Unemployment had previously remained at 4.7 per cent since January, when it reached a low level not seen since 2005.

However, despite the high level of employment, the prospects for tighter monetary policy in the near term are limited by the slow pick-up in wages.

Average weekly earnings grew by 2.1 per cent year-on-year, slightly slower than the 2.2 per cent rate seen in February.

The Bank of England’s monetary policymakers have repeatedly pointed to stagnating wage growth as evidence there is further slack in the labour market.

In its latest forecasts the Bank predicted unemployment will fall to 4.5 per cent by 2020, indicating its economists believe there is still some way to go before employees start demanding higher wages.

That belief meant the Bank also predicted real wages will fall. Real wages take into account the effect of inflation on the purchasing power of the money in employees’ pockets.

Consumer price index inflation during March reached 2.7 per cent as the devaluation of sterling since the EU referendum result continued to feed through into prices, while the Bank’s economists believe average weekly earnings will only rise by two per cent this year.

City AM

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