The number of people in work in Britain fell by the most in more than two years in the three months to September, a sign that a Brexit slowdown may be taking its toll on the economy’s strong run of job creation.
After rising strongly in recent years, the number of people in employment fell by 14,000, official data showed.
“After two years of almost uninterrupted growth, employment has declined slightly on the quarter,” said Matt Hughes of the UK Office for National Statistics.
The number of people in work remained higher than a year earlier, however, and statistician Mr Hughes warned that people should not read too much into figures for one quarter. “A fall in employment over the quarter suggests that persistent lacklustre economic growth and appreciable economic and Brexit uncertainties may be starting to rein in the labour market’s strength,” said Howard Archer, an economist with EY Item Club, a forecasting body. Britain’s economy initially withstood the shock of last year’s decision by voters to leave the EU but has slowed in 2017 and is growing at half the rate of Germany. Most forecasters expect it to slow further in 2018.
George Buckley, an economist with Nomura, said the fall might reflect the slowdown in the overall economy in the first half of 2017 and could be reversed in the second half of the year.
The unemployment rate held at a four-decade low of 4.3% but pay growth — which would usually be expected to rise with so many people in work —- remained much slower than inflation.
Investors are watching the labour market data closely as a way to gauge when the Bank of England might raise interest rates again after making its first hike in borrowing costs in more than 10 years earlier this month.
Most of the Bank of England’s policymakers expect the steep fall in Britain’s unemployment rate will soon start to push up wages more strongly. Workers’ total earnings, including bonuses, rose by an annual 2.2% in the three months to September. Data published earlier this week showed British consumer price inflation stood at 3% in October, maintaining the squeeze on the spending power of households.