UK unemployment falls to 4.9% in September, hits 11-year low

Unemployment dropped to its lowest level in 11 years in September in a further indication that Britain’s employers have largely shrugged off the Brexit vote.

Official figures show the unemployment rate was 4.8%, the lowest since September 2005 and down from 4.9% in August and 5.3% a year earlier.

The fall in unemployment by 37,000 from the previous quarter to 1.6 million people was held up by the employment minister, Damian Hinds, as the mark of a strong labour market in the wake of the EU referendum.

He also welcomed the employment rate, which remained at a record high of 74.5%, and figures showing that annual wage rises, excluding bonuses, nudged higher to 2.4% from 2.3% in August and 2.1% in July.

“Growth is being fuelled by full-time professional jobs while wages are continuing to perform strongly, which underlines the resilience of the UK labour market,” he said.

But figures from the Office for National Statistics (ONS) revealed the claimant count in October jumped by its highest number since May, and analysts warned that the rate at which employers were taking on new workers had slowed dramatically.

Employment growth dropped to 49,000 in the three months to September from 106,000 in August and 173,000 in the three months to July, while the claimant count jumped by almost 10,000 to 803,300.

The figures for the three months to September are the first health check of the labour market where all the data applies to the period following the referendum.

The Bank of England, the International Monetary Fund and Paris-based thinktank the Organisation for Economic Cooperation and Development (OECD) had all predicted that a UK vote to leave the EU would take its toll on employers and push up unemployment.

Most forecasters now expect GDP growth to slow and inflation to rise in the coming months, overtaking wage rises and threatening the living standards of most workers during 2017.

The Scotiabank economist Alan Clarke said: “Our only hope is that wage inflation will rise in tandem with inflation. However, I suspect that given the leads and lags, wages will not rise quickly enough to offset the squeeze to real incomes in 2017.”

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