UK labour market holds firm amid broader economic slowdown

[LONDON] The number of people out of work in Britain fell in the three months to March as the labour market held ground faced with a slowing economy before the European Union membership referendum.

The number of unemployed fell 2,000 in the three months to March, the Office for National Statistics said, but the unemployment rate held steady at 5.1 per cent as expected by economists in a Reuters poll.

The number of people in work rose by 44,000, taking the employment rate to a record high of 74.2 per cent.

Britain's economy slowed in the first quarter of the year, and recent data suggested it could lose further momentum as uncertainty around the June 23 referendum takes a toll on consumers and investors.

Bank of England Governor Mark Carney has said the most recent weakness in data reflects the forthcoming vote, but the central bank has also said it would treat economic data around the vote with caution.

Workers' total earnings including bonuses rose by an annual 2.0 per cent, up from 1.9 per cent in the three months to February. Economists taking part in a Reuters poll had expected growth of 1.7 per cent.

The ONS said the timing of bonuses this year had affected the rise in total earnings.

Excluding bonuses, earnings rose by 2.1 per cent year-on-year in the three months to March, down from 2.2 per cent and against expectations for a 2.3 per cent rise.

Wages largely lagged the broader economic recovery in recent years, but the BoE is watching for signs of stronger pay growth as it considers when to raise rates from their record low, which economists expect will only happen next year.

If Britain votes to leave the EU, economists reckon the Bank of England might have to juggle a potential slump in growth and inflationary pressures from lower sterling and higher import prices.

Private industry surveys have pointed to falling jobs vacancies and show employers favouring temporary staff over permanent staff as the referendum nears.

The government introduced a new, compulsory National Living Wage of 7.20 pounds an hour for workers aged 25 and above in April, a 50 pence rise on the existing minimum wage. The ONS said there was no anecdotal evidence that this had affected earnings in the three months to March.

The number of people making jobless claims fell by 2,400 in April to 737,800 but was revised sharply higher in March. The claimant count rose by 14,700 in March - the biggest increase since September 2011.

REUTERS