The UK unemployment rate declined to a fresh low in three months to February and earnings of employees increased at the fastest pace in nearly three years, signaling easing squeeze on consumer spending.
The ILO jobless rate came in at 4.2 percent in the three months to February, which was below the 4.3 percent logged in the three months to January, data from the Office for National Statistics showed Tuesday. This was the lowest rate since comparable data began in 1971.
At the same time, the employment rate was 75.4 percent, the highest since 1971.
The number of unemployed decreased by 136,000 annually to 1.42 million and employment increased by 427,000 to 32.26 million.
Average weekly earnings in nominal terms increased by 2.8 percent in the three months to February, both excluding and including bonuses, compared with a year earlier. The 2.8 percent growth in total pay was the fastest since the third quarter of 2015.
February’s labor market figures provide optimism that sustained rises in real wages are now in prospect and should seal the deal on another interest rate hike in May, Ruth Gregory, an economist at Capital Economics, said.
The economist expects the Bank of England to raise interest rates three times this year, more than markets expect.
Suren Thiru, head of economics at the British Chambers of Commerce, said the end of a prolonged squeeze on real wage growth is an important moment, although maintaining positive real wage growth could prove challenging without sustained increases in productivity and relieving the high upfront costs which restrict pay increases.
ONS data showed that the claimant count remained unchanged at 2.4 percent in March. The number of people claiming jobseekers’ allowances increased by 11,600 from February.