UK ‘jobs miracle’ stutters as employment level falls

EMPLOYMENT is falling and wage growth has stopped rising, according to the latest official figures, in further signs of economic strain.

Observers warn that the shine is coming off the UK’s long-running “jobs miracle”, which has seen more people in work than ever before.

Figures for the three months to August from the Office for National Statistics show a fall of 56,000 in employment, which leaves 1.31 million out of work. That was notably worse than the rise of 26,000 pencilled in by economists, and took the unemployment rate up a notch, from 3.8% to 3.9%.

Although that is still historically low, it offers further evidence to those who believe the economy is showing the pain of Brexit worries, with business investment down and productivity stagnant.

Thomas Pugh at Capital Economics says the labour market remains the strongest part of the economy, but that today’s figures show “that the underlying weakness in economic growth is restraining labour market activity”.

Tej Parikh, chief economist at the Institute of Directors, said: “Challenging economic conditions are starting to take the shine off the UK’s job boom. Business leaders’ long-lasting drive to expand their workforce has put the labour market in a strong position. However, firms are now increasingly coming up against uncertainty and the shrinking supply of available talent.”

The figures on pay remain solid, with earnings rising at an annual rate of 3.8%. However, that was the same rate as last time, suggesting pay rises have stalled. ONS figures show that pay remains below the peak hit before the recession of 2008.

Emma-Lou Montgomery, associate director for personal investing at Fidelity International, said: “The UK labour market has been somewhat of an enigma, seemingly robust despite the political and economic odds that are stacked against it.

“For now, this will have a continued positive easing effect on household budgets, but it also begs the question of how much more the labour market can endure, particularly as the economic forecast for the third quarter is likely to be more rain.”