UK Employment Figures, July 2018: Britain’s Job Creation Boom Continues
UK employment rate reaches a new high of 75.7%, but wage growth slows.
Britain’s job creation boom is running on empty – and yet it refuses to stall.
According to the latest data on the UK labour market released today by the ONS, the UK labour market has continued its remarkable run of tempting ever more people to join the workforce.
But as employment drives up, the fuel on which the labour market runs – people wanting to get into work – is getting scarcer. So it’s both impressive and surprising that during this tight labour market there is still enough slack to meet the demands of the economy’s job creation engine.
The unemployment and the inactivity rate are at their lowest levels for more than four decades, and the employment rate is still marching upwards, leaving unanswered the question economists have been asking for months – how high can it go?
The other great mystery is why such a tight labour market is not delivering faster wage growth. Regular pay growth has slowed and the average Briton’s wage packet is once again barely outpacing inflation.
With employers having to fight hard for every jobseeker, wages should be rising as recruiters battle for talent. But 2018’s modest wage growth comes after years of pay stagnation, and British salary growth was the lowest in the G7 over the past decade.
Nevertheless, the abundance of jobs continues to make the UK attractive to foreign workers, and yesterday the ONS confirmed that net migration into the UK stabilised in 2017.
Despite the disappointing fall in the pace of wage growth, Britain’s labour market remains in generally rude health, which will be food for thought for the Bank of England as it mulls a potential interest rate rise in August.
Tara Sinclair is an associate professor of economics and international affairs at the George Washington University and a senior fellow of the Indeed Hiring Lab. She has a PhD in economics from Washington University in St. Louis and her research focuses on modeling, explaining, and forecasting trends in the labor market and other macroeconomic variables both in the US and worldwide. For the Hiring Lab, Tara is working on research projects using Indeed’s unique data to develop new insights into the labor market.