United Kingdom unemployment drops to February 1975 low

Irving Hamilton
August 16, 2018

Commuters walk over London Bridge.

The unemployment rate underlines the continued strength of the labor market, despite a slowdown in the rate of job growth in the three months to the end of June to just 42,000.

Economists polled in the run up to the release had expected an unemployment rate of 4.2%.

The BoE raised the bank rate by 25 basis points to 0.75 percent at the beginning of August, only the second rate rise in over 11 years.

Commenting on the latest figures from the Office for National Statistics, Ian Mean, director of Gloucestershire Chamber, Business West, said: "Government will no doubt highlight the fact that unemployment is at its lowest level since the 1970s, but we must remember that this figure is slightly misleading, given that it is a reflection of the claimant count, rather the total number of the United Kingdom adult population who find themselves out of work".

The unemployment rate was 4.0%, the lowest level since December 1974 to February 1975.

"As such, there remains precious little sign that wage growth is set to take off - undermining a key assumption behind the Monetary Policy Committee's recent decision to raise rates".

There were 2.64 million Scots with a job bertween April and June, a rise of 12,000 over the previous period.

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The official figures also slowed a fall of 104,000 in the number of those on of those on "zero-hours contracts" in their main job, to 780,000.

Experts said the numbers revealed the highest amount of vacancies since records began in 2001.

While on the surface the data looks good, Ruth Gregory, a senior United Kingdom economist at Capital Economics, warned about the underlying cause of the drop.

But the numbers hinted that, as the employment market is growing, the United Kingdom workforce is shrinking - partly due to Brexit.

The UK's unemployment rate may have beaten expectations, but forecasts proved too optimistic when it came to wages.

"We are investing a record £2.4 billion in enterprise and skills, £4 billion in infrastructure and delivering the most competitive package of rates relief in the United Kingdom, including the Small Business Bonus, which to date has saved Scottish firms nearly £1.5 billion".

Earnings in cash terms, including bonuses, increased by 2.4 percent in the three month period.

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