15th October 2014
The UK’s unemployment tally dropped by 154,000 to 1.97m in the three months to the end of August according to new numbers from the Office for National Statistics.
The official figures highlighted that the number of unemployed in the country has now tumbled by 538,000 over the past year, representing the largest annual fall in unemployment on record.
However during the three month period, there were almost 31m people in work – 46,000 more than the March to May 2014 total, marking the smallest quarterly increase since the same period last year. Comparing June to August 2014 with a year earlier, there were 736,000 more people in work.
Pay including bonuses for employees over the term was just 0.7% higher than a year earlier while pay excluding bonuses for employees was up 0.9%.
Howard Archer chief UK and European economist IHS Global Insight expects unemployment to continue to trend downward over the coming months but at a gradually slowing rate to stand at 5.8% at the end of 2014 and 5.5% at the end of 2016. He said: “While we expect the economy to continue growing at a healthy clip, we suspect growth moderated to 0.7% quarter-on-quarter in the third quarter from 0.9% quarter-on-quarter in the second quarter. We see growth being centred in a 0.6–0.7% quarter-on-quarter range going forward.
“We also anticipate employment growth will increasingly be limited by improving productivity, as many companies are able to make greater use of the workers they already have.”
Ben Brettell, senior economist at Hargreaves Lansdown added: “More jobs and lower unemployment is clearly good news, but the lack of wage growth remains a thorn in the side of an otherwise fairly robust recovery. A year-on-year increase in earnings of 0.7% is nothing to write home about, and remains considerably below the rate of inflation. Many economists predict that we will see wage growth start to come through over the next twelve months or so, but this has been the forecast for a while and it is yet to materialise. The weakness in wages reflects subdued productivity, which has been hamstrung by a lack of capital investment.”