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The Actuary The magazine of the Institute & Faculty of Actuaries
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Unemployment falls but signs show labour market is ‘beginning to cool’

UK unemployment fell by 16,000 to 1.62 million between August and October, with the rate of 4.8% remaining the lowest since 2005, according to figures by the Office for National Statistics released today.

14 DEC 2016 | CHRIS SEEKINGS
Unemployment levels continue to fall ©Shutterstock
Unemployment levels continue to fall ©Shutterstock

However the rate of employment fell slightly to 74.4% in comparison to the record high of 74.5% seen in the three months leading up to September, with the total number of people in work now at 31.76 million.

This, along with an increased number of people receiving benefits, has led economists to fear that the UK’s decision to leave the EU is now hitting the jobs market.

British Chambers of Commerce head of economics, Suren Thiru, said: “The labour market remains a source of strength for the UK economy.

“The number of people in work remains close to historically high levels, with unemployment levels continuing to fall.

“However, there are signs that the UK labour market may be beginning to cool, with a small fall in employment and the continued rise in the claimant count measure.

“It is likely that unemployment will start to drift upwards in the coming months, as uncertainty over Brexit and the increasing input costs faced by businesses weigh on jobs growth.

“While we currently forecast the unemployment rate will peak at 5.5% in early 2018, this is still well below the long-term average.”

UK Unemployment rate:

Source: Office for National Statistics
Source: Office for National Statistics

The latest figures show that there are 23.2 million people working full-time in the UK, 235,000 more than a year earlier, and 8.56 million people working part-time, 107,000 more than last year.

In addition, the average weekly earnings for employees in Great Britain, in nominal terms, increased by 2.5% including bonuses in the year to October – higher than the 2.3% rise seen in September.

However there are fears that much of this will be eroded through consumer price inflation, which rose to 1.2% in November compared to a 0.9% rise in October.

TUC General Secretary Frances O’Grady said: “Wages are still struggling to get off the ground with increases in pay offset by rising inflation.

“After the longest wage squeeze since Victorian times, this isn’t the pay boost working people need to get their living standards back on track.

“The government needs to act fast to avoid another living standards crisis. That means a clear plan for Brexit that will protect jobs, pay and rights.”

It was also reported that the rate of people aged from 16 to 64 who were economically inactive was 21.7%, higher between August and October than it was between May and July.