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British labor market is losing momentum in Q3 2016

British labor market is losing momentum in Q3 2016 and is already emerging signs of increasing pressure on households by accelerated inflation. The employment grows by 106,000 people in the period June-August compared to the previous quarter, after previous months were recorded increases of over 170,000 people. The growth in employment is sufficient to keep the unemployment rate at 11-year low level of 4.9%, but growth in real wages slowed to its weakest level since early 2015. The wages growth was by just over 2% yoy, and inflation accelerated because of the weak currency and because of rising oil import prices.

This could undermine the consumer spending and hurt economic growth. Bank of England signaled, that it may cut interest rates again to support the economy after the referendum for Brexit. Large part of the economists and analysts expect Bank of England to ease monetary policy on the meeting on November 3.

The economy performed better than expected, after the referendum in June. However, next year are expected sharp slowdown as companies already reporting restrictions in hiring and investment plans.

The number of unemployed people increased by 10,000 in Q3 2016, compared to the previous quarter, reaching 1.66 million people, which is the first increase since February.

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