The U.K.’s unemployment rate decreased to its lowest level since 1974 in the three months to July and pay growth accelerated, a sign the country’s job market remained tight despite some easing in labor demand.
The U.K.’s unemployment rate was 3.6% in the three months to July, down from 3.8% in the preceding three-month period, data from the Office for National Statistics showed Tuesday. Economists polled by The Wall Street Journal expected the jobless rate to increase to 3.9%.
The drop in unemployment came with an increase in the inactivity rate, which rose 0.4 percentage points to 21.7%. The increase in economic inactivity compared with the previous three-month period was driven by students and the long-term sick, which increased to a record high.
Employment increased further in August. The number of payrolled employees rose by 71,000 on month, broadly unchanged from the 77,000 increase registered in July.
Wage growth accelerated as employers stepped up their efforts to retain staff. Average weekly earnings excluding bonuses in the three months to July rose 5.2% on year, more than the 4.7% increase registered in the preceding three-month period. Adjusted for inflation, earnings without bonuses decreased 2.8%.
Despite the jobs market remaining tight, there were signs of cooling labor demand. The number of job vacancies from June to August stood at 1.266 million, a decrease of 34,000 from the previous quarter and the largest quarterly fall in two years.
“This fall in vacancies, the second quarterly fall in consecutive periods, may reflect uncertainty across industries, with an increased number of respondents reporting recruitment freezes,” the ONS said.
