UK Analysis: Q1 Jobless Rate Falls; Real Reg Earnings Fall: MNI

-UK Jan-Mar LFS Unemployment Rate 4.6% vs 4.7% Dec-Feb -UK Jan-Mar Real Regular Earnings -0.2% 3m/year-ago vs +0.1% Dec-Feb

London (MNI) – The UK unemployment rate fell further in the first quarter, touching its lowest level in almost 12 years, but earnings growth stagnated, with inflation-adjusted regular earnings falling over the same period of last year.

Joblessness, as measured by the Labour Force Survey, declined to 4.6% in the first quarter, below the MNI median forecast of 4.7%, down from 4.7% in the three months to February, the lowest level of unemployment since the three months to July of 1975.

The outturn also fell short of the 4.7% jobless rate forecast of Bank of England staff for the three months to March, as published in the May Quarterly Inflation report.

On a single month basis, the unemployment rate fell to 4.3% in March from 4.8% in February, the lowest on record according to experimental statistics.

But the steady fall in joblessness has failed to translate into higher earnings, with real regular wages declining in the first quarter, for the first time since the three months to September of 2014.

Average weekly earnings, excluding bonuses, increased by an annual pace of 2.1% in the first quarter, below the MNI median forecast of a 2.2% rise, down from a 2.2% gain in the previous three months.

But with inflation rising to an annual rate of 2.3% in March, real wages actually declined by 0.2% in the first quarter.

In the month of March, regular earnings rose by an annual rate of 2.1%, but real wages declined by 0.5% over the same month of 2016.

Including bonuses, total earnings improved by an annual pace of 2.4% in the three months to March, matching the MNI median forecast, up from 2.3% in the previous period. That leaves real regular wage growth at 0.1% in the first quarter, the lowest since the three months to October of 2014.

On a single month basis, total earnings rose by an annual rate of 2.4% in the month of March, but fell by an annual rate of 0.1% in real terms.

Employment rose by 122,000 to 31.95 million, exceeding the median MNI forecast of an 24,000 jump. That took the employment rate to a record-high 74.8% in the first quarter, from 74.6% in the three months to February.

Vacancies rose by 22,000 in the first quarter, to a record high of 777,000. Private sector surveys have highlighted widespread skill shortages, hampering employer recruitment.

The more up-to-date claimant count rose by 19,400 in April, above the MNI median forecast of 7,500 increase. That left the associated unemployment rate at 2.3%, up from 2.2% in March.

The claimant count for March was revised to show a 33,500 gain, compared to the 25,500 jumped reported last month. The claimant data were revised dramatically in January to reflect the replacement of Job Seekers Allowance with Universal Credit throughout the country and are no longer considered national statistics.

WEDNESDAY, MAY 17, 2017 – 04:30

-London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com

Source: MNI

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