Brexit latest: Jobs market rides out referendum shock

In the three months to July employment rose by 174,000 taking the overall employment rate to a joint record high of 74.5 per cent

(Getty)

The British jobs market has so far absorbed the Brexit shock, the latest report from the Office for National Statistics shows.

In the three months to July employment rose by 174,000, taking the overall employment rate to a joint record high of 74.5 per cent.

Unemployment fell by 39,000 over the three months, leaving the jobless rate steady at 4.9 per cent.

The number of vacancies – another positive sign of the health of the market – rose by 3,000 to 752,000 in the three months to August.

No Brexit effect yet

However, the annual (three month average) rate of total wage growth slowed down slightly to 2.3 per cent in July from 2.5 per cent previously.

And the more timely claimant count rate for August showed a 3,500 increase in the numbers on Jobseeker's Allowance or Universal Credit.

The surprise 8,600 fall in the July claimant count – immediately after the referendum – was revised down to a 3,600 contraction.

Jobseeking up

ONS

Analysts warned that a slowdown in hiring was still likely in the wake of the EU referendum result.

“We have to remember that it also takes time for businesses to react to shock outcomes, like the Brexit vote. Few businesses would pull job offers they had already made because of the outcome,” said James Knightley of ING.

He added that survey evidence of weakening hiring intentions prompted him to expect softer jobs growth in the coming months.

“The 2,400 rise in the timelier claimant count measure of unemployment in August and the weakening in employment surveys suggest that the worst is yet to come. Indeed, the Leave vote will probably cause some firms to put hiring decisions on hold or cut back headcouts altogether,” said Ruth Gregory of Capital Economics.

Laura Gardiner of the think tank the Resolution Foundation said pay growth appeared to have “got stuck at worryingly low levels”, a particular concern since inflation is widely expected to pick-up due to the 10 per cent depreciation of sterling since the June referendum.

“This problem long predates the Brexit vote but the stakes on turning it around have now got higher,” she said.

“Stronger pay settlements and a huge productivity drive will be needed to change this and prevent another painful wage squeeze in the coming years.”

The Bank of England will make its monthly interest rate decision tomorrow. City of London analysts expect rates to be held at 0.25 per cent, but many still anticipate a further cut to 0.1 per cent later in the year to support the economy.