Yesterday’s official figures also showed the sharpest annual decline in the number of EU workers in Britain since 1997, continuing a trend seen since the 2016’s vote to leave the EU, and a pick-up in annual productivity growth.
Despite some positive elements, the figures painted a largely familiar picture of a tight labour market — including a record number of job vacancies — failing to translate into strong wage growth.
Britain’s economy warmed up a little in the second quarter from its winter slowdown of early 2018, official data showed last week, but there was no sign of an end to its lacklustre performance in the run-up to next March’s Brexit. “This will not be what the Bank of England will have wanted to see, as one of the justifications for (its) decision to hike rates earlier this month was that it was expecting wage growth to start lifting off.
This hasn’t happened yet,” said Emma-Lou Montgomery, an associate director at Fidelity International.
The BoE raised interest rates on August 2 for only the second time since the financial crisis.
Yesterday’s data showed productivity grew at its fastest annual rate since late 2016 and the number of people whose main job was an insecure zero-hours contract fell by the most since 2000, the Office for National Statistics said.
The unemployment rate fell to 4.0% in the April-June period, the Office for National Statistics said.
That was the lowest since the three months to February 1975 and beat economists’ forecasts in a Reuters poll for it to hold steady at a previous low of 4.2%.
The drop came despite a smaller-than-expected number of jobs created over the three-month period, 42,000 — less than half the average forecast by economists in a Reuters poll.
Sterling briefly rose above $1.28 against a broadly weaker dollar, as yesterday’s data helped a struggling pound move away from 13-month lows plumbed last week.
Total annual wage growth slowed to a nine-month low of 2.4%, below forecasts for it to hold at 2.5%.
The ONS said changes to the timing of annual bonus payments was partly responsible.
Excluding bonuses, pay growth fell to 2.7%, well below the 4% rate typical before the financial crisis a decade ago.
Output per hour worked grew by 1.5% year-on-year in the April-June period, the biggest increase since late 2016 after a 0.9% rise in the first quarter of 2018.
With less than eight months until Britain is due to leave the European Union, the ONS data showed an acceleration of EU nationals leaving Britain’s workforce.
In the second quarter there were 2.35mn EU nationals working in Britain, down 86,000 on a year ago, the largest fall since records began. “Shortages are already hampering firms’ ability to compete and create jobs, so it’s vital that the UK pursues an open and controlled post-Brexit immigration policy,” Matthew Percival, head of employment at the Confederation of British Industry, said.
The number of nationals from the eight East European countries that joined the EU in 2004 fell by 117,000, an 11.7% drop on the year.
That was party offset by a 54,000 increase in Romanians and Bulgarians.
The number of workers employed on often-precarious zero-hours contracts fell to 780,000, or 2.4% of the workforce, the lowest since 2015.