UK unemployment fell to its lowest rate in more than seven years this summer, as Britain’s jobs-rich recovery pushed the number of people in work to a record high, reports The Telegraph.
The jobless rate fell to 5.4pc in the three months to August, from 5.6 per cent in the three months to May as the number of unemployed people fell by 79,000 to 1.77m. This is the lowest rate since May 2008, before Lehman Brothers collapsed.
The Office for National Statistics (ONS) said employment rose by 140,000 over the period, lifting the number of people in work to 31.12m, which is the highest since records began in 1971. The employment rate for those of working age also hit a record high of 73.6 per cent.
“Today’s fall in unemployment has more than outstripped the recent rises, leaving unemployment at its lowest level since mid 2008,” said Nick Palmer, an ONS statistician.
Britain’s record employment rate means the UK is fast catching up with Germany and Japan, according to OECD data. Michael Saunders, chief UK economist at Citi, said the UK could soon have the highest employment rate in the G7.
The data also showed a marked drop in the rate of youth unemployment, which fell to 14.8 per cent in the quarter to August, from with 15.9 per cent in the previous three months.
Wage growth also continued to strengthen. Pay, including bonuses, rose by 3 per cent in the quarter to August compared with the same period a year earlier, following growth of 2.9 per cent in the three months to July. This represents the strongest growth in more than five years.
Excluding bonus payments, pay growth eased to 2.8 per cent, from 2.9 per cent in July, according to the ONS.
While analysts had expected both total and regular pay growth to climb above 3 per cent over the period, James Knightley, an economist at ING, said low inflation would continue to boost pay packets in real terms.
Inflation, as measured by the consumer prices index (CPI) dipped back into negative territory in September.
“With headline CPI in negative territory and employment rising we are seeing substantial increases in real household earnings, which is supporting consumer confidence and should help boost consumer spending growth. This is clearly a positive for domestic activity and offers more evidence to suggest that market expectations of the first Bank of England rate rise being more than a year away seem too cautious,” he said.
George Osborne, the Chancellor, said: “It is great news that Britain’s economic plan continues to create jobs and increase pay. We’ve got the highest rate of employment in our history, and real terms pay rising strongly.”
