Unemployment in the UK has fallen to 6%, the lowest rate since 2008, right before the economic crash, according to the Office for National Statistics. Unemployment is now literally at the same level it was when Lehman Bros. collapsed.
Don’t get too excited though. After inflation is taken into account the real value of people’s wages is actually falling — and that’s not a good sign. More on that below.
The unemployment rate is a little bit lower than expected. Analysts were forecasting 6.1%.
The country added 46,000 jobs in the most recent period. Unemployment also dipped below the headline grabbing 2 million mark: “There were 1.97 million unemployed people,” the ONS said. “538,000 fewer than a year earlier. This is the largest annual fall in unemployment on record.”
Here’s the chart. That’s a pretty epic nosedive:
Let’s look at what everyone else is saying about it.
This chart tweeted by Sky’s Faisal Islam puts it in perspective nicely.
The UK is America, basically. Its economy is completely detached (labour-wise) from the European area:
Reuters says wage rates aren’t really climbing:
Many British employers have been able to keep a lid on pay as more people seek work.
Excluding bonuses, pay rose 0.9 per cent, picking up from a revised 0.8 per cent in the May-July period.
The Wall Street Journal makes the same point. The recovery isn’t really making most people richer:
Britons are still not feeling the recovery in their pockets.
… Britons’ salaries are still to pick up — they kept falling when the increase in prices is taken into account. Average weekly earnings grew by only 0.7% in the three months to August, while annual headline inflation was more than double the rate during the period.
When bonuses are excluded, average weekly earnings grew slightly above market expectations and increased by 0.9%, which is nonetheless still a decline in pay in real terms.
Bloomberg says there actually signs of economic weakness in the numbers:
While the data points to continued strength in the labour market, there are some signs of a slowdown. Jobless claims fell the least since April 2013 in September and a quarterly increase in payrolls was the smallest in more than a year.
The Bank of England kept its key interest rate at a record-low 0.5 per cent last week. The nine-member Monetary Policy Committee has split in recent months, with two officials voting to increase borrowing costs to reflect the prospect of increasing wage pressures. The majority have cited continued risks to the recovery as a reason to keep emergency policy settings.
Recent surveys have pointed to a weakening in Britain’s recovery. Manufacturing and services growth eased in September and BOE Governor Mark Carney, who has put wages at the center of the policy debate, has said the slump in the euro area could act as a “drag” on the U.K.
Here’s the ONS’s statement:
Key Points for June to August 2014