UK jobs drop the most in four years ahead of general election
The drop caused two Bank of England officials to call for a rate cut, however, total and basic pay both rose by 3.6%, comfortably above inflation
London — Britain’s employers cut more jobs from July to September than in any quarter for four years, according to official data, which highlights how the labour market is slowing as an election nears, although the fall was smaller than economists forecast.
Strong jobs growth has been a silver lining of the Brexit crisis for British workers as companies hired staff rather than make longer-term commitments to investment.
The unemployment rate fell back to 3.8%, its lowest level since early 1975, the UK Office for National Statistics (ONS) said.
But falls in the number of people in work, vacancies and the pace of wage growth added to signs of slowdown which prompted two Bank of England (BOE) officials to vote for an interest rate cut last week.
“Granted, the employment data can be volatile, and the recent drop is being driven by part-time employment. But the drop ... could be an early sign of a sharp softening in labour demand, and a broader turning point in the labour market,” HSBC economist Chris Hare said.
However, Samuel Tombs, an economist at consultancy Pantheon Macroeconomics, said the softening appeared gradual enough for the BOE to steer clear of any rate cut for now.
Sterling rose slightly after the figures were published.
The ONS said the number of people in employment fell by 58,000 to 32.753-million, less severe than the median forecast of a fall of 94,000 in a Reuters poll of economists. But it represents the biggest decline since the three months to May 2015.
Total and basic pay both rose by 3.6%, weaker than all forecasts, although still comfortably above inflation.
Britain’s economy grew by a decade-low 1% in the 12 months to September, hit by US-China trade tensions and the approach of a now postponed Brexit deadline of October 31. Prime Minister Boris Johnson, seeking to break the Brexit impasse, has called an election for December 12.
But many employers say the uncertainty is likely to continue even if Johnson wins the election as he must hammer out a new EU trade deal before a deadline at the end of 2020.
Labour Party leader Jeremy Corbyn says he will renegotiate the Brexit divorce deal and call a new referendum.
The Brexit uncertainty has aggravated Britain’s weak productivity record. Output per hour was flat in annual terms in the third quarter, an improvement from a 0.5% fall in the April-June period, the ONS said.
That measure of productivity has not grown since the second quarter of 2018, the longest such run in a decade. Vacancies showed their biggest annual fall since the end of 2009 to 800,000.