HOT OFF THE WIRE

Unemployment in UK is the lowest in 20 years

Unemployment in UK is the lowest in 20 years

The increase in wage growth is a positive sign, and with the number of people without job per job vacancy also falling in recent months, economic theory would suggest that pressures on wages in future will be upwards. However recent history has showed that reality can challenge economic models says Nick Henderson, senior broker at Global Fidelity Fund. A model of job creation in less productive areas of the economy, increases in flexible working contracts and technology weakening bargaining power of workers have led to slowing wage growth despite a tightening labour market. It may be too early to call an end to the real wage squeeze.

Nominal wage growth has picked up to 2.1% after several months of slowing, said Alan Green, senior analyst at Molton Wealth. However, the effects of inflation over this period of 2.6% leaves real wages in negative territory, down 0.5% on last year. This means consumer purchasing power is still being squeezed and these are not great news for retailers.

Figures show today a fall in the UK unemployment rate to just 4.4% in the second quarter of 2017, which is the lowest rate since 1975. In absolute terms this equates to an extra 125,000 people in employment since the first quarter of 2017.