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UK Employment Figures, June 2018: The Jobs Market Continues Strong

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Britain’s buoyant jobs market has managed to defy economic gravity once again – and is successfully floating above the sputtering economy.

Despite the latest round of weak economic news, the labour market numbers released today by the ONS surprised on the upside with strong employment gains, low unemployment, and rising wages.

We might expect at this point in the economic cycle, with both unemployment and the inactivity rate at their lowest levels for more than four decades,  to see a slowdown in hiring. Instead, the ONS reported today that the number of people in work increased another 146,000 between November 2017 to January 2018 and February to April 2018.  

Nevertheless the tightness in the labour market is forcing employers to fight harder for every recruit, and this is driving up wages.  For now workers are seeing pay gains in real, i.e. inflation-adjusted, terms.

 

While the return of real wage growth is welcome for workers, pay rises alone cannot deliver lasting benefits to the economy. In the long term, rising wages can stoke inflation unless we see the one thing that continues to elude the surprisingly resilient labour market – better productivity.