UK unemployment rate hits 44-year low as number in work hits record high

Real wages rise at fastest pace since August 2016 but average earnings remain below pre-financial crisis peak

Spring Statement: Philip Hammond on the 'uncertainty' of brexit damaging the economy

UK unemployment hit a 44-year low and wages rose in the three months to January, the latest official figures show.

The number of people in work jumped 222,000 to 32.7 million, the highest since records began in 1971.

Unemployment fell from 4 per cent to 3.9 per cent, its lowest since the start of 1975 when Harold Wilson was prime minister.

Wages rose 1.5 per cent when adjusted for inflation, the fastest rate since August 2016.

However, the rise was not enough to make up for previous years of stagnation, leaving average wages £7 per week below where they were at their peak before the financial crisis.

Over the last year, the number of people in work jumped by 473,00 to 32.71 million with two-thirds of the new jobs added were full-time, the Office for National Statistics (ONS) said.

ONS senior statistician Matt Hughes said: “The employment rate has reached a new record high, while the proportion of people who are neither working nor looking for a job – the so-called ‘economic inactivity rate’- is at a new record low.”

But economists cautioned that the headline figures could be concealing deeper malaise.

“Employment growth may [be] being lifted by businesses preferring to employ rather than commit to investment, given current heightened uncertainties, and the fact that employment is relatively low cost and easier to reverse if business subsequently stalls,” said Howard Archer, chief economist of the EY Item Club.

He pointed out that business investment – the part of the economy that traditionally leads to increases in productivity and efficiency – fell in every quarter of the year.

Andrew Wishart, UK economist at Capital Economics, said there was no sign that Brexit-related concerns had hurt the labour market.

“It is surprising that the labour market has remained so strong while economic growth has eased. Indeed, annual employment growth of 1.6 per cent is above the growth in the economy of 1.4 per cent, implying that output per worker – productivity – is falling.”

If a fall in productivity – the amount of goods and services workers produce per hour – was to be confirmed, it would imply less positive news is to come on wages.

Philip Hammond suspects economy adjustment 'would be rather like the adjustment after 1980'

In the long term wages can only continue to increase sustainably if productivity increases.

Minister of state for employment, Alok Sharma, hailed the figures. “Our jobs market remains resilient as we see more people than ever before benefiting from earning a wage,” he said.

“By backing the government’s Brexit deal and giving certainty to business, MPs have the chance to safeguard this jobs track record.”

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