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UK wages grow at fastest rate since 2008 as employment soars

By Abigail Townsend

Date: Tuesday 11 Dec 2018

UK wages grow at fastest rate since 2008 as employment soars

(Sharecast News) - UK employment has reached a record high, official data showed on Monday, with nominal wages growing at a rate not seen for a decade.
According to the Office for National Statistics' Labour Force Survey, there were an estimated 32.48m people in work between August and October, 79,000 more than the previous quarter and a 396,000 improvement on the same three months a year ago.

It means that the employment rate is now at 75.7%, up on last year's 75.1% and the joint highest rate since records began in 1971.

There was an estimated 1.38m unemployed people in the quarter, an increase of 20,000 on the previous three months but a decrease of 49,000 on a year earlier. The unemployment rate was 4.1%, unchanged on the previous quarter.

Average weekly earnings in nominal terms, which are not adjusted for price inflation, rose 3.3% year-on-year, excluding bonuses. That was the biggest rise since July 2008 and ahead of forecasts of around 3%.

In real terms, they increased by 1% including bonuses, a level not seen since late 2016.

ONS senior statistician Matt Hughes said: "The employment rate has continued to rise in the more recent three months, returning to a joint record high, boosted by an increase in full-time workers. There was a corresponding fall in the inactivity rate - the proportion of people neither working nor looking for a job - while the unemployment rate was virtually unchanged.

"Real earnings are now growing faster than any time since around the end of 2016."

The news gave a boost to sterling, which on Monday crashed to its lowest level against the dollar for 20 months over the Brexit turmoil.

David Cheetham, chief market analyst at XTB, said: "The latest employment data has supported an attempted recovery in the pound. In particular, an unexpected rise in wages is seen as positive for sterling, with the 3.3% increase on a three-month annualised basis coming in at its highest level in over eight years.

"Having said that, this data pales into insignificance compared to the latest Brexit developments as far as the markets are concerned, and on this front, the ongoing uncertainty leaves the pound vulnerable to further declines."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said there was now a strong case for the Bank of England to raise interest rates "at the earliest opportunity after the threat of a no-deal Brexit has disappeared, but even earlier action isn't warranted. The pick-up in the headline measure of wage growth in October largely reflects a 22% year-over-year increase in bonuses in the financial sector, which are extremely volatile."

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