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UK jobless rate falls to 11-year low and wages edge up

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20/07/2016
The UK unemployment rate has fallen to an 11-year low of 4.9%, while wages have grown by around 2% year-on-year.

Figures from the Office for National Statistics (ONS) show there were 1.65 million unemployed people for the period between March and May, 54,000 fewer than for the three months to February.

Average weekly earnings increased by 2.3% including bonuses and by 2.2% excluding bonuses compared with a year earlier.

However, these figures reflect pre-referendum conditions and some analysts suggest the unemployment rate could rise.

Ben Brettell, senior economist at Hargreaves Lansdown, said:Brexit has added a significant amount of uncertainty, and it is perfectly possible that firms will delay hiring decisions until they have greater confidence.

“In a survey of more than 1,000 business leaders conducted by the Institute of Directors, a quarter of respondents said they would freeze recruitment and 5% said they expected to lay workers off.

“As such the current unemployment rate of 4.9% could be the lowest we see for a while, but if the forecast downturn in the labour market does materialise, at least we start from a position of relative strength.”

David Morel, managing director of Tiger Recruitment, said: “For us, the most noticeable change in the jobs market since the vote to leave the EU has been a spike in demand for temporary staff.

“We fully expect the temp market to continue to be the biggest beneficiary of a lack of clarity surrounding the implications of Brexit.

“Permanent recruitment activity has by no means dried up, especially among bigger companies where demand for staff is more or less what it was pre-Brexit.

“But until there is a greater understanding among employers about the wider implications of Brexit, particularly concerning future free-trade agreements with the EU, we would expect the permanent jobs market to remain fairly static.”

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