Surprise rise in wage growth as unemployment falls – but claimant count rises

Emma Haslett
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UK wage growth rose more strongly than expected (Source: Getty)

UK wage growth rose more strongly than expected between August and October, hitting 2.5 per cent – beating expectations of a fall to 2.3 per cent.

The figure was a rise from 2.4 per cent in July to September. Regular pay, which doesn't include bonuses, rose 2.6 per cent, up from 2.4 per cent in July to September.

Unemployment fell to 1.62m, down 16,000 from May to July and 103,000 lower than the same period last year.

However, the employment rate – the proportion of people aged between 16 and 64 who were in work – dipped to 74.4 per cent, down from a record high of 74.5 per cent.

And the claimant count rose in November to 809,000, up from 806,700 the month before.

Howard Archer, chief European and UK economist at IHS Markit, suggested that may be the trend as the UK approaches Brexit.

"We suspect both the economy and the labour market will be increasingly pressurised by mounting uncertainties over the coming months – particularly once the government triggers Article 50 (it is still aiming for end-March) and likely very difficult negotiations with the EU come increasingly to the forefront," he said.

"We also expect growth to slow as consumer purchasing power is increasingly squeezed," he added.

The number of hours worked also fell to 31.9 on average between August and October, while those in full-time jobs worked 37.3 hours per week, down 0.2 hours (that's about 10 minutes less), than May to July.

Yesterday figures by the ONS showed inflation rose to 1.2 per cent in November, its highest in two years, as weak sterling and climbing oil prices continued to take their toll.

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