UK employment defies Brexit jitters to hit new record

By Sean Farrell

Date: Tuesday 19 Mar 2019

UK employment defies Brexit jitters to hit new record

(Sharecast News) - UK employment reached a new record in the three months to January as employers hired more workers despite concerns about Brexit and the wider economy.

The employment rate for November to January was 76.1% - up from 75.3% a year earlier and the highest figure on record, official figures showed.

Unemployment stood at 3.9% - highest since January 1975, the Office for National Statistics said, as employment rose by 222,000 - the biggest increase since November 2015 and almost double the 120,000 average analyst forecast. Full-time roles accounted for two-thirds of the overall rise in employment.

Some economists had expected recent economic weakness to begin affecting the job market, which has defied worries about Brexit and the slowing economy.

Annual regular pay growth was steady at 3.4%. Economists had expected wage increases to weaken.

Andrew Wishart, UK economist at Capital Economics, said: "There was no sign in the labour market data of Brexit concerns at the start of the year as the data beat expectations in every regard ... It is surprising that the labour market has remained so strong while economic growth has eased."

The Bank of England expects the UK economy to expand in 2019 at its slowest pace for a decade and recent surveys have shown employers cutting investment as Brexit headed for gridlock. Employment also often lags other indicators as economies slow.

Tej Parikh, senior economist at the Institute of Directors, said: "The labour market continues to have the wind in its sails, but there may be choppy waters ahead ... With uncertainty around Brexit reaching a crescendo, firms are becoming more and more cagey over their hiring decisions. Business leaders are also facing a cumulative burden of cost pressures which will limit just how high they can raise wages."

Despite concerns about slowing economic growth, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said rising employment and wages could prompt the BoE's monetary policy committee to increase interest rates earlier than expected.

"The labour market is clearly tight enough to be a sustained source of upward pressure on inflation," Tombs said. "We continue to think that the MPC will raise Bank Rate again before the end of this year. The one-in-three chance of a 2019 hike priced-in by markets looks far too low."


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