UK Unemployment Hits Lowest Since 1974

By Staff, Agencies

Britain's jobless rate has hit its lowest since 1974 but the drop was due mostly to a fall in the size of the workforce and there are other signs the country's jobs boom is petering out, adding to the Bank of England's inflation headache.

The unemployment rate sank to 3.6 per cent in the three months to July, the Office for National Statistics said. Economists polled by Reuters had expected it to hold at 3.8 per cent.

However, the fall was not a sign of health in Britain's economy which is at risk of a recession.

The number of people in employment grew by 40,000, less than a third of the increase forecast in the Reuters poll.

"We're now starting to see signs of a labor market losing its momentum," Jack Kennedy, UK economist at the global job site Indeed, said.

The economic inactivity rate - measuring the share of the population who are not in work and not looking for work - increased by 0.4 percentage points on the quarter to 21.7 per cent, its highest since the three months to January 2017.

The ONS said the rise was driven by more people classified as long-term sick and by fewer full-time students moving into employment than normal for the time of year.

At the same time, pay growth rose by more than expected, reflecting a shortage of candidates for jobs, although it still lagged far behind inflation that is expected to hit 10.2 per cent in the 12 months to August when figures are published on Wednesday.