No sign of Brexit hit as employment rate reaches new record high

Jake Cordell
Follow Jake
Economists expect unemployment to creep up over the next few years, but it hasn't happened yet
Economists expect unemployment to creep up over the next few years, but it hasn't happened yet (Source: Getty)

The employment rate reached a new record high in June, as fresh figures from the Office for National Statistics (ONS) also showed no sign of a post-referendum hit to jobs.

The latest jobs numbers, which refer to the month of the referendum, showed the number of people in work climbed to its highest on record of 31.75m in the second quarter of the year - an employment rate of 74.5 per cent. The unemployment rate, which calculates the number of people actively looking for work, also held steady at a post-recession low of 4.9 per cent.

Early data for July also showed a surprise fall in the number of people claiming out-of-work benefits. Economists had expected the so-called "claimant count" to rise by 9,000 in July, but it defied expectations to tumble by 8,600, allaying fears that the post-referendum shock had prompted businesses to lay off staff immediately.

Scott Bowman at Capital Economics said: "Today's figures showed that the UK labour market brushed off pre-referendum uncertainty which should provide a solid base for the hit from the vote to leave the EU."

Wage growth also remained strong, with average hourly earnings rising by 2.4 per cent in the year to June - the fastest rate since last October and far ahead of inflation which was running at 0.5 per cent over the same period.

Vacancies also held up well over the period, in another sign the UK's jobs boom was on course right up until the vote. The number of open positions dropped by just 0.9 per cent in the May to July period.

However, the surprisingly upbeat data did not lead to a wholesale revision of expectations, with experts still predicting a rise in unemployment over the coming months.

"This may be the last time for a while that we see such a low unemployment figure," said Nina Skero, senior economist at the Centre for Economics and Business Research (CEBR). She expects the squeeze to come on wages, first, however, rather than a big jump in unemployment.

"Companies facing hardship may choose to limit costs by holding wages steady rather than cutting staff. This is in line with the approach that some UK based companies took when dealing with the aftermath of the global financial crisis."