Brexit latest: Jobs market holds up in August

The numbers in employment between June and August rose 106,000 on the previous quarter, while the unemployment rate was steady at 4.9 per cent

Click to follow
The Independent Online

The jobs market held up well in August and September, showing few adverse effects from the June Brexit referendum result.

The latest report from the Office for National Statistics showed the numbers in employment between June and August rose 106,000 on the previous quarter, while the number of unemployed edged up by 10,500.

The unemployment rate was steady at 4.9 per cent.

jobs.jpg

The more up-to-date claimant count in September showed an increase of just 700 on the previous month, against City analysts’ expectations of a 3,000 increase.

Average wages were up by 2.3 per cent year on year, down slightly from the 2.4 per cent for the previous period, but in line with expectations.

Vacancies, a sign of healthy demand in the labour market, were 749,000 in the three months to September, down slightly from the 750,000 in the three months to August.

“These figures show that employment continued to grow over the summer and vacancies remain at high levels, suggesting continuing confidence in the economy. While there was also a small rise in the headline unemployment level, that was accompanied by more people actively seeking work,” said Nick Palmer of the ONS.

Scott Bowman of Capital Economics said the muted wage growth “should provide the [Bank of England's] Monetary Policy Committee with some comfort that domestic cost pressures aren’t increasing by much at a time when the fall in the pound should result in a sharp rise in externally driven costs”.

However, some analysts saw signs of a slowdown in the latest report. The quarterly rate of employment growth of 106,000 was the lowest since April and down from 174,000 and 172,000 in the previous two months.

The 10,500 quarterly increase in unemployment was the first increase since February.

jobs2.jpg
ONS

 

“We suspect both the economy and the labour market will be increasingly pressurised by mounting uncertainties over the coming months – particularly once the Government triggers Article 50 and likely very difficult negotiations with the EU come increasingly to the forefront,” said Howard Archer of IHS Global Insight.

“Consequently, we see the unemployment rate starting to trend up before too long and suspect that it could reach 5 per cent by the end of 2016, 5.6 per cent by the end of 2017. We see it rising further to 5.9 per cent by the end of 2018.”

Official inflation figures yesterday showed a jump to 1 per cent in September.

Analysts expect inflation to rapidly overshoot the Bank of England’s 2 per cent target as the impact of the falling pound feeds through into shop prices, squeezing the purchasing power of wages.

Comments