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Unemployment rate drops to 4.9%

The Office for National Statistics (ONS) has released its UK labour market statistics for April to June 2016, confirming that there were 1.64m unemployed people (people not in work but seeking and available to work), 52,000 fewer than for January to March 2016.

This was 207,000 fewer than for a year earlier and the lowest since March to May 2008.

The unemployment rate* was 4.9%, down from 5.6% for a year earlier. The last time it was lower was for July to September 2005. 

Between January to March 2016 and April to June 2016, the number of people in work increased. The number of unemployed people and the number of people not working and not seeking or available to work (economically inactive) fell.

There were 31.75m people in work, 172,000 more than for January to March 2016 and 606,000 more than for a year earlier.

There were 23.22m people working full-time, 374,000 more than for a year earlier. However, there were 8.53m people working part-time, 231,000 more than for a year earlier.

The employment rate (the proportion of people aged from 16 to 64 who were in work) was 74.5%, the highest since comparable records began in 1971.

There were 890,000 unemployed men, 124,000 fewer than for a year earlier. There were 750,000 unemployed women, 84,000 fewer than for a year earlier.

There were 8.84 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 58,000 fewer than for January to March 2016 and 179,000 fewer than for a year earlier.

The inactivity rate (the proportion of people aged from 16 to 64 who were economically inactive) was 21.6%, the joint lowest since comparable records began in 1971.

Average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.4% including bonuses and by 2.3% excluding bonuses compared with a year earlier.

Recruitment & Employment Confederation (REC) chief executive, Kevin Green, commented, “The UK labour market continued to perform well before the referendum, with today’s ONS data showing that unemployment remained at 4.9 per cent and employment grew by 172,000. We currently have an employment rate of 74.5%, the highest since records began in 1971. Our members tell us that clients continue to need more people in order to meet demand, be that permanent or temporary staff. 

“It is encouraging to see wage growth continue to rise at 2.4 per cent, up on the month before. With inflation now predicted to exceed the Bank of England’s two per cent target next year, it’s important that employers use pay and benefits to retain their people as skill and talent shortages continue to be a problem.

“Our Report on Jobs data for July showed a drop in permanent hiring immediately after the referendum, but it is still too early to draw conclusions about the implications for the vote to leave the EU on the jobs market. Today’s ONS data shows the jobs market fundamentals are strong and this puts the UK in a good position to bounce back from the initial shock.” 

John Salt, group sales director of totaljobs, said, “Given that this is the first month that ONS figures have included data from the outcome of the EU Referendum, it’s really positive to see that unemployment has fallen yet again. It seems that businesses remain confident and this is certainly a sentiment we’ve seen echoed in our own data, which found that almost half (44%) of UK businesses say that Brexit won’t affect the number of people they hire.

“However, it would be naïve to assume that the UK job market has successfully navigated the stormy waters caused by Brexit. Our August Totaljobs Employment Index revealed that the number of applications per job, a measurement of job competitiveness, is up 14% year-on-year. Therefore, the new Government must continue to do all it can to create conditions where businesses of all sizes will be encouraged to keep on hiring."

Doug Monro, co-founder of Adzuna, stated, “What these figures show is that the jobs market was on track – before Brexit happened. Unemployment had fallen to its lowest post-recession level and fewer people were joining the queue for jobs. Brexit has added extra caution to the mix for employers, but is unlikely to derail the recovery. Over the next couple of the months, employers will be keeping an eye on their bottom line as the pressure builds on them to keep the doors open to new hires. Laying the groundwork overseas would help reassure many.

“One place where the result is already being felt is salaries. As well as battling other applicants, rising inflation and a weak pound have made getting a job more urgent as the value of wages is cut. Salaries are starting to stagnate so switching roles could be a good move for many.

“June saw 1,157,723 advertised vacancies – up 0.7% monthly. It may be optimistic to expect the same across the next few months. But even if there’s a short-term dip, Britain is a country of grafters and that will never change.”

Anna Leach, CBI head of Economic Analysis and Surveys, said, “Ahead of Britain’s vote to leave the EU, the UK’s jobs market remained in rude health, though vacancies have continued to tick down since the beginning of the year. The Bank of England was right to act swiftly to shore up confidence and keep money flowing through the economy. But businesses now need the Government to make ambitious decisions in the Autumn Statement that will secure the UK’s economic future as changes to trade, regulation and access to skills loom on the horizon.”

*The unemployment rate is the proportion of the labour force (those in work plus those unemployed) that were unemployed.

Connor Campbell, a senior market analyst at, commented, "The latest UK jobs report seems to have baffled a few people this Wednesday, the figures not revealing the expected Brexit slowdown.

"There are a few caveats attached to this morning’s data; the unemployment rate (unchanged at 4.9%, though it did fall to a fresh post-financial crisis low) and wage growth (up to 2.4% from 2.3% month-on-month, but lower than the 2.5% forecast) readings both cover the 3 months to the end of June, missing out on the real Brexit meat. And, obviously, it is well worth remembering that we are at the start of a very long journey, even if the past 2 months or so have packed enough drama in to last for years.

"Yet despite all this the claimant count change was still a big surprise. Analysts had been expecting an increase of 5.2k; instead the number of people receiving unemployment benefits fell by 8.6k across July, with employers seemingly ignoring the panic caused by the referendum result. While this is no guarantee that the jobs sector is still in good health, especially considering the huge revisions that can often affect the claimant count change figure, it was enough to steady the pound, which is still holding at 1.30 and 1.155 against the dollar and euro respectively. The FTSE, however, couldn’t find much momentum after the jobs update, slipping 0.2% largely thanks to Admiral Group’s 8.4% plunge.

"Looking to the afternoon and, bar the US crude oil inventories reading, there isn’t much for the markets to contend with. The Dow Jones is set to open at a 15 point loss, taking the index back below 18550 just days after it hit a fresh, post-18660 all-time high."

With regards to older workers, Rachael Saunders, age at work director at Business in the Community, said, “Whilst it’s always positive that employment rates for older workers are increasing, it’s not enough progress to reverse employment skills gap employers are currently facing – a talent gap of 7.7 million empty roles by 2022. These percentage increases hide what are actually small increases of absolute numbers in the older age group.   

“As expected, more men over 50 are in work than women, and whilst the rate of women aged 50-64 in work is increasing slightly faster than men – it is again too small an increase to bode well for gender parity for future older female workers. This reflects established cultural norms established over a long period of time, which must be addressed to make recruitment and progression fair for men and women of all ages.

“This data reiterates and reinforces the need for businesses to act now to ensure it can retain skills and experience of older workers and equip them to thrive in modern work environments."

With regards to employment by ethnicity, Sandra Kerr OBE, Race Equality Director at Business in the Community, stated, “Whilst we welcome the increase in Black, Asian and Minority Ethnic (BAME) employment in today’s figures, we need to know more about the quality of jobs BAME employees are in. The TUC report ‘Living within the margins’ found that BAME employees are disproportionately likely to be working in low-paid, short-term roles or on zero-hours contracts, and if the increase in BAME employment is in these types of roles then it is simply not sustainable. Employers must ensure that they are recruiting BAME candidates to secure and well-paid positions with opportunities for progression, which will feed the future talent pipeline and improve BAME representation at all levels within organisations.” 

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