The number of people in employment in the UK rose to a fresh all-time high in the three months to May, according to the latest data from the Office for National Statistics (ONS) released on Tuesday.
There were 32.4 million people employed during the period, a high since accurate records of the UK’s employment rate began. That represented an employment rate of 75.7%.
“We’ve had yet another record employment rate, while the number of job vacancies is also a new record. From this it’s clear that the labour market is still growing strongly,” Matt Hughes, a senior statistician at the ONS said in a statement.
As employment rose, unemployment fell during the March to May period, with 12,000 fewer people out of work than in the previous period, the ONS said. The UK’s unemployment rate remained at just 4.2%.
While on the surface the report looked largely positive, there were some negative elements, with Ben Brettell, a senior economist at FTSE 100-listed investment manager Hargreaves Lansdown pointing to the unexpected rise in the number of people in the UK claiming benefits. The claimant count rose by 7,800 people in the data period.
Wage growth also moderated slightly, with the average UK earnings increasing 2.7%, compared to 2.8% at the last data release in June.
“Real earnings remain modestly up on the year, both including and excluding bonuses,” Hughes said in his statement.
Those numbers do, however, mean that wages are still growing faster than inflation, meaning that Brits are seeing real wage increases.
“All in all these numbers don’t alter the economic picture of anaemic growth, a relatively tight labour market and under-control inflation,” Brettell said in an email shortly after the data was released.
A Bank of England rate hike is coming
The data is the last jobs report before the Bank of England meets on August 2 to discuss raising interest rates for just the second time in a decade, with markets widely expecting the central bank to do so.
Tuesday’s numbers are likely to have helped that cause, according to Andrew Wishart, UK economist at Capital Economics.
“The final set of labour market figures before the Monetary Policy Committee’s August meeting will not deter the Committee from pressing ahead and raising interest rates,” he wrote in an email, pointing in particular to the reasonably steady wage growth.
“Leading indicators of pay suggest that it is on track to at least meet the Bank of England’s forecast for underlying wage growth of 2.75% y/y in Q4. As such, we continue to expect the MPC to vote to raise interest rates next month,” he said.
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