Rise in job numbers pushes up wage rates

Unemployment is falling, the number of people in work is rising sharply and wage growth is accelerating, according to official figures yesterday that painted a picture of a robust labour market.

Unemployment is falling, the number of people in work is rising sharply and wage growth is accelerating, according to official figures yesterday that painted a picture of a robust labour market.

The Government's spending plans are creating new jobs and pushing up wages – offsetting a haemorrhaging of workers from manufacturing and the City. Analysts said the strength of demand for labour had dented hopes of a cut in interest rates and would calm fears of an imminent slump in consumer spending.

John Butler, the UK economist at HSBC, said: "There is no other word for this set of data other than strong. The labour market continues to defy the odds."

The number in work rose to a new all-time high of 27.78 million as 107,000 people found jobs between September and November. The official unemployment level fell 5,000 to 1.52 million while the number of people claiming benefit dropped by 5,800 in December to a fresh 27-year low of 928,300.

The continuing demand for workers pushed the annual growth rate of average earnings – wages plus bonuses – to 3.9 per cent in November, from 3.7 per cent the previous month. This is the highest for five months but is still below the Bank of England's "rule of thumb" maximum of 4.5 per cent as a guide to hitting its inflation target.

The breakdown of the figures from the Office for National Statistics showed a sharp divide between services and manufacturing and between private and public services.

The number of manufacturing workers fell to a new low of 3.58 million in November, a total of 155,000 redundancies over the past 12 months – a figure that was condemned by trade unions and the Conservatives.

The latest sector-by-sector figures, which only go up to September, show that 225,000 new services jobs were created over the past year. On the other hand there was a fall of about 45,000 in agriculture and finance and business services.