News

UK unemployment drops to 5.4pc – the lowest in 7 years

The unemployment rates have dropped to figures not seen since 2008, in the three months to August this year.

The Office for National Statistics has said Britain’s unemployment rate fell to 5.4 percent, down from 5.5 percent earlier in the year [1].

Numbers of those employed shot up by 140,000, pushing the employment rate to 73.6pc, marking the highest figure since records began in 1971. While unemployment figures fell 79,000, the biggest fall since the quarter to January [1].

The Bank of England is monitoring the figures for further signs of pick up as it may consider raising interest rates for the first time since the financial crisis.

Dean Turner, Economist at UBS Wealth Management has said; “rising wages pressure will likely prompt the Bank of England to hike interest rates soon, most likely in the first quarter of next year” [2].

Wage growth has risen, although not as quickly as anticipated. Basic pay rose by 2.8pc annually in the three months to August, falling 0.1pc from a month previous to this. Economists had expected it to reach 3pc [2].

UK inflation fell by -0.1pc last month, meaning that real wages are rising by around 3pc [2].

The recent wage growth is only applicable to those working in the private sector after the announcement by the Chancellor George Osborne to enforce a 1pc pay freeze, which could last until 2019 [2].

[1]. Reuters UK. ‘UK unemployment rate falls to new seven-year low, pay growth edges up’. http://uk.reuters.com/

[2]. The Guardian. ‘UK unemployment rates hit seven-year low of 5.4% – live’ – http://www.theguardian.com/