Unemployment in the UK fell to a 5 ½ year low while the number of employed persons surged to a record high due to the strengthening economy.
The unemployment rate plunged to 6.5 percent in the quarter through May, the lowest level since the final quarter of 2008, compared with 6.6 percent in the three months through April, reported the Office for National Statistics. Unemployment claims plunged 36,300 in June from a month earlier.
The Bank of England Governor Mark Carney recently said that the benchmark interest rate will remain at 0.5 percent, a record-low, until the slack in the labor market is utilized. Though a Tuesday report showed inflation increased and today’s data indicates unemployment is declining, another report showed that wages rose by the slowest pace in 5 years, giving BOE officials more time.
“ONS data suggests the improvements will continue,” David Tinsley, a London-based economist at BNP Paribas SA told Bloomberg. “For monetary policy the signs that the labor market is heading nearer capacity is further sign that a footstep on the road to normalization cannot be delayed for too long.”
In the quarter through May, the number of employed workers grew 254,000 to 30.6 million, a record-high since Britain started keeping records in 1971. Out of this, 231,000 persons were employed full-time.
Economists using the International Labour Organization methods had forecasted that the jobless rate would fall to 6.5 percent, while the unemployment claims were expected to decline 27,000. Based on ILO methods, the unemployment rate plunged to 6.2 percent in May, the lowest level since September 2008, compared with April’s reading of 6.4 percent.
The jobless claims are at their lowest levels since October 2008; while the total number of unemployed persons as per ILO methods plunged 121,000 to 2.12 million in the quarter through May compared with the three months ended February.
The pay growth in the quarter through May was 0.3 percent, compared with 0.8 percent reported in April. This was the slowest pace since May 2009. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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