Labour market shows no sign of Brexit uncertainty - yet

Jake Cordell
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London workers walk across bridge
Is the hiring boom the calm before the storm? (Source: Getty)

The number of people in work hit a new record high in July, as economy-watchers were left waiting even longer for signs of a post-referendum slowdown.

Figures out from the Office for National Statistics (ONS) yesterday morning showed the unemployment rate steady at 4.9 per cent, defying concerns that the jobs market could have faltered in the first full month after the EU vote.

John Hawksworth, chief economist at PwC said the figures were “consistent with other broadly reassuring economic data for the the post-referendum period, which point to a moderation of growth rather than a recession.”

Read more: Is London the weak spot in the UK's jobs boom?

“Contrary to initial fears that the vote to leave the European Union would immediately lead to an economic downswing with rising unemployment, the labour market seems to be holding steady,” said Kay Daniel Neufeld at the Centre for Economics and Business Research.

The ONS said an all-time high 31.77m people were in work.

Neil Carberry, director of people and skills at employers’ body the CBI added: “The strength of employment growth in the first half of this year is encouraging, and highlights the resilience of the UK’s flexible labour market.

The strong figures sent the FTSE 100 soaring by 50 points, before nervy investors began to book profits ahead of tomorrow’s meeting of the Bank of England’s rate-setting monetary policy committee.

However, analysts warned against getting carried away with, as hiring-and-firing decisions tend to be one of the last indicators to respond to changing economic fortunes.

Wage growth also eased back, climbing by just 2.3 per cent over the last year, compared to a rate of 2.5 per cent in numbers out last month.

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Rising inflation as a result of the weaker pound will put pressure on the value of pay rises over the coming year,” said Michael Martins, economist at the Institute of Directors.

Martin Beck, senior economic adviser to the EY Item Club, added: “The labour market tends to react to developments in the wider economy, rather than lead them, so it is not surprising that there is scant evidence of any Brexit impact so far.”

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