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UK unemployment rate falls to new 43-year low
BRITAIN'S unemployment rate fell to its lowest in over 43 years in the three months to June and fewer workers made do with insecure jobs, but there was little upside for most as pay growth slowed to its weakest in nine months.
Tuesday's official figures also showed the sharpest annual decline in the number of European Union (EU) workers in Britain since 1997, continuing a trend seen since the 2016's vote to leave the EU, and a pick-up in annual productivity growth.
Despite some positive elements, the figures painted a largely familiar picture of a tight labour market - including a record number of job vacancies - failing to translate into strong wage growth.
Britain's economy warmed up a little in the second quarter from its winter slowdown of early 2018, official data showed last week, but there was no sign of an end to its lacklustre performance in the run-up to next March's Brexit.
"This will not be what the Bank of England (BOE) will have wanted to see, as one of the justifications for (its) decision to hike rates earlier this month was that it was expecting wage growth to start lifting off. This hasn't happened yet," said Emma-Lou Montgomery, an associate director at Fidelity International.
The BOE raised interest rates on Aug 2 for only the second time since the financial crisis.
Tuesday's data showed productivity grew at its fastest annual rate since late 2016 and the number of people whose main job was an insecure zero-hours contract fell by the most since 2000, the Office for National Statistics (ONS) said.
The unemployment rate fell to 4.0 per cent in the April-June period, the ONS said.
That was the lowest since the three months to February 1975 and beat economists' forecasts in a Reuters poll for it to hold steady at a previous low of 4.2 per cent.
The drop came despite a smaller-than-expected number of jobs created over the three-month period, 42,000 - less than half the average forecast by economists in a Reuters poll.
Sterling briefly rose above US$1.28 against a broadly weaker US dollar, as Tuesday's data helped a struggling pound move away from 13-month lows plumbed last week.
Total annual wage growth slowed to a nine-month low of 2.4 per cent, below forecasts for it to hold at 2.5 per cent. The ONS said changes to the timing of annual bonus payments was partly responsible.
Excluding bonuses, pay growth fell to 2.7 per cent, well below the 4 per cent rate typical before the financial crisis a decade ago.
Output per hour worked grew by 1.5 per cent year-on-year in the April-June period, the biggest increase since late 2016 after a 0.9 per cent rise in the first quarter of 2018.
With less than eight months until Britain is due to leave the EU, the ONS data showed an acceleration of EU nationals leaving Britain's workforce.
In the second quarter there were 2.35 million EU nationals working in Britain, down 86,000 on a year ago, the largest fall since records began.
"Shortages are already hampering firms' ability to compete and create jobs, so it's vital that the UK pursues an open and controlled post-Brexit immigration policy," Matthew Percival, head of employment at the Confederation of British Industry, said.
The number of nationals from the eight East European countries that joined the EU in 2004 fell by 117,000, an 11.7 per cent drop on the year. That was party offset by a 54,000 increase in Romanians and Bulgarians.
The number of workers employed on often-precarious zero-hours contracts fell to 780,000, or 2.4 per cent of the workforce, the lowest since 2015. REUTERS