Employment levels highest since 1971
Unemployment fell by 14,000 between October and December to 1.36 million, while the employment rate is the highest since 1971. There were 167,000 more people in employment during the final three months of 2018 than during July to September.
Average earnings increased by 3.4% in the year to December, which puts earnings growth well ahead of inflation, which dipped to 1.8% in January.
Tom Stevenson investment director for Personal Investing at Fidelity International, said: “The UK economy received a much needed confidence boost today thanks to the latest household earnings data. Wage growth including bonuses continued to rise at 3.4%, both including and excluding bonuses. That is usefully ahead of the latest inflation reading of 1.8% so our real purchasing power is rising month by month. Unemployment also fell by 100,000 compared with a year ago to 1.36m. The recent resilience of wage growth is one of the few good surprises in the UK economy.
“We still, however, seem to be missing the right combination for unlocking the door to monetary normality. The political deadlock of Brexit negotiations continues to have an impact on the Bank of England’s decision to hold interest rates for the foreseeable future, and with inflation now below the Bank’s target, the Monetary Policy Committee will see no need to rock the boat for now. Especially, given that there is no reassurance that this upwards trajectory in wage growth will continue if confidence in the UK economy does not pick up.”
Joshua Mahony, senior market analyst at IG, said that the jobs numbers failed to meet market expectations, which put pressure on the pound, but added: “With employment, unemployment, and wage growth impressive by historical standards, the jobs market remains one strong point for the UK economy.”