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Roundup: British unemployment rate drops to six-year low, real wage increases

Xinhua, January 22, 2015 Adjust font size:

Britain's unemployment rate fell more than market estimation consensus in the quarter ending November 2014 and wages grew at the fastest pace in more than two years, data showed by the Office for National Statistics (ONS) Wednesday.

However, the mounting risk of deflation may hold back the Bank of England's (BoE) plans to raise interest rates, economists here reckon.

RECORD LOW UNEMPLOYMENT

The British unemployment rate fell to 5.8 percent in the three months to November 2014, from 7.1 percent a year earlier, marking its lowest level since mid-2008, the Office for National Statistics (ONS) said Wednesday.

The unemployment rate was also lower than the market estimation consensus of 5.9 percent.

There were 1.91 million unemployed people in the quarter ending November, down by 58,000 from the previous quarter, and 418,000 less than a year earlier.

The employment rate for those aged 16 to 64 for the period from September to November was 73.0 percent, similar to that in the previous quarter.

There were 30.80 million people in employment aged 16 and over, 37,000 more than from June to August 2014 and 512,000 more than same period a year earlier.

Claims for unemployment benefit fell for the 26th month by 29,700 to 867,700 in December from the previous month. Compared to a year earlier, it was down by 370,800, data also showed.

ENCOURAGING SIGNS

In the same period, wages were 1.7 percent higher than a year earlier. Pay excluding bonuses for employees was 1.8 percent higher, recording its biggest increase since the third quarter of 2012, noted ONS.

Figures released by ONS previously showed that British consumer prices index (CPI) grew by 1 percent in the year to November 2014, and increased by merely 0.5 percent in December.

Vicky Redwood, chief British economist at Capital Economics, commented that it was "encouraging news" that the recovery in real wages was gathering pace.

She added an interest rate rise was still a long way off and that the robust labor market should boost the general consumer-led recovery.

Howard Archer, British economist at IHS Global Insight, said in a note: "With earnings growth likely to strengthen as 2015 progresses and inflation being extremely low, workers should see a marked improvement in their purchasing power, which bodes well for consumer spending."

"The government will certainly be hoping this makes people feel better about life and more prepared to vote for them in May's general election," added Archer. Endit