UK job growth slows but labour market withstanding Brexit shock – ONS

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Workers leave the underground station at the Canary Wharf business district in London February 26, 2014. REUTERS/Eddie Keogh

Job creation in Britain slowed in the three months to August although there was little sign of a big hit to the labour market from the country’s decision to leave the European Union, official data showed on Wednesday.

The number of people in work rose by 106,000 between June and August, down from gains of more than 170,000 in each of three previous readings.

The unemployment rate held at a nearly 11-year low of 4.9 percent, in line with a forecast in a Reuters poll of economists.

The data follows previous signs that Britain’s labour market has largely weathered the initial shock of the referendum decision to leave the EU.

“These figures show that employment continued to grow over the summer and vacancies remain at high levels, suggesting continuing confidence in the economy,” ONS statistician Nick Palmer said.

The number of people out of work rose by 10,000 in the three months to August, the first rise since the three months to February.

Unemployment is widely expected to rise more sharply as companies hold off from hiring as they wait for more clarity on the country’s future ties to the EU, which could take years to emerge.

The ONS said the number of unemployment benefit claimants rose by 700 to 776,400 in September.

Economists had expected the number of benefit claimants – which is considered to be a potential early warning sign of an economic downturn – to rise by 3,000.

The ONS also said the number of vacancies edged down

in the three-month period to the end of September to 749,000 from 750,000 in the three months to the end of June.

Wage growth in the June-August period effectively held steady.

The ONS said workers’ total earnings including bonuses rose by an annual 2.3 percent, compared with 2.4 percent in the three months to July. Economists taking part in a Reuters poll had expected growth of 2.3 percent.

Excluding bonuses, earnings rose by 2.3 percent year-on-year against expectations for a 2.1 percent rise.

Inflation rose to 0.9 percent in September and is expected to climb sharply towards 3 percent by the end of next year, reflecting the sharp fall in the value of the pound since the Brexit vote and threatening to hurt the spending power of workers.

The ONS said in real terms – measuring regular pay against inflation – earnings rose at their slowest pace since February 2015.

In August alone, based on a smaller sample of respondents than the main three-month measure, the jobless rate rose to 5.0 percent from 4.7 percent in July but the ONS said the figures were volatile and less representative than the headline, three-month number.

(Reporting by William Schomberg and Andy Bruce)

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