The UK unemployment has reached its lowest level in 43 years

August 14, 2018 11:59 amComments Off on The UK unemployment has reached its lowest level in 43 yearsViews: 23

UK unemploymentThe UK unemployment has reached its lowest level in Q2 2018 in last 43 years, but the rate of increase in wages shows signs of weakening. The UK unemployment rate is 4%, which is the smallest percentage since February 1975, according to the National Statistics Office. The expectations of the economists were the rate to stay at 4.2%.

The fall may also be included in the list of reasons of the British Central Bank (BoE) had raised interest rates earlier this month. According to politicians, the inflationary pressure on the labor market is beginning to build up, with a shortage of skilled workers forcing some employers to raise wages in an attempt to attract and retain workers.

However, there are few signs of overall wage increases – wage growth is slowing down to a nine-month low of 2.4% between April and June. However, the Bank of England expects an acceleration to 3.5% later this year.

Productivity is important here because, without significant improvement, profit margins of companies may be under pressure to be offset by rising prices.

According to data released on Tuesday for the second quarter, hourly production increased by 0.4%, leaving productivity with a growth of only 1.5% per year.

The BoE expects the unemployment to fall to 3.9% this year, according to the governor of the financial institution, further interest increases will be needed to bring inflation back to the target of 2%.

The wage growth, excluding bonuses, has slowed down to 2.7% – its lowest value since January, but still ahead of inflation, which is 2.4%.

The increase in employment over the past year is mainly due to hiring Britons as fewer foreigners come to the country after the Brexit referendum. There is a record decline in employment amongst EU citizens, driven mainly by residents of the eight countries that joined the bloc in 2004.

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