UK unemployment declined in the third quarter to its lowest level in 11 years, but according to many factors the dynamics of the labor market slowed. The unemployment rate decreased in Q3 2016 to 4.8% from 4.9% in Q2 2016, according to British statistics office. The employment growth, however, amounts to only 49,000 new jobs, which is far less below the expectations and far below the rise in the previous three months (172,000 new jobs).
“The unemployment is at its lowest level in over 10 years, while employment remained at a record low”, said David Freeman from British statistics office. “However, there are signs that the labor market may be cooling, as employment grows more slowly”, added he.
Moreover, there are signs that rising inflation is already affecting living standards, as real wage growth was only 1.7% in Q3 2016. This is the lowest level since February 2015.
The slowing labor market and rising prices threaten to undermine consumer spending, which have been the engine of nearly 4-year economic expansion. The uncertainty of the negotiations between Britain and European Union, is expected to hit hiring and investment. Therefore, employees are likely to be difficult to agree on significant wage increases.
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