UK jobs boom grinding to a halt, new data show

The number of people in work in the UK fell in the three months to October, providing fresh evidence that Britain’s jobs boom is grinding to a halt.

Between August and October there were 32.08m people in work, 56,000 fewer than in the previous three months, according to figures published by the Office for National Statistics on Wednesday.

The UK statistical agency identified the same trend when it published labour market data for the three months to September — the first time in a year that the number of people in work had dropped.

However, economists were divided about whether this marks the end of Britain’s five-year period of rapid employment growth.

Stephen Clarke, of the Resolution Foundation think-tank, said Britain’s jobs boom “may have finally reached the end of the road”.

But Andrew Wishart, of Capital Economics, said the weakness in employment would not persist. “All of the hiring surveys that we track point to annual employment growth accelerating significantly . . . while unfilled vacancies are at a record high,” he added.

Although employment has been growing strongly for the past five years, the upward trend has been punctuated by other occasional downward shifts that ultimately proved temporary.

Growth in average earnings picked up only a little over the three months to October. Excluding bonus payments, average earnings were 2.3 per cent higher between August and October than they had been a year earlier.

The growth in total pay, including bonus payments, was more rapid at 2.5 per cent. Total pay growth was boosted by a rapid increase in bonus payments in the finance and business services sectors.

But wages continued to rise less quickly than prices — meaning average earnings have fallen in real terms.

Prices grew by 3 per cent over the year to October. After adjusting for inflation, average earnings excluding bonuses were 0.4 per cent lower between August and October than they were a year earlier.

The new figures provide mixed signals for the members of the Bank of England’s Monetary Policy Committee, who meet on Wednesday to decide whether to raise interest rates. The MPC’s decision will be announced on Thursday.

Last month, seven of the nine MPC members voted to raise interest rates for the first time in a decade, pointing to growing evidence of upward pressure on wages, which they fear will stoke inflation.

But deputy governors Dave Ramsden and Jon Cunliffe voted against the majority, preferring to wait for further evidence of a pick-up in earnings.

“This is a weak report that will strengthen the hands of the doves on the MPC seeking a long pause before the next rate hike,” said Samuel Tombs, of Pantheon Macroeconomics. “Evidence that the tight labour market is fuelling faster wage growth remains lacking.”

But George Buckley, of Nomura, said some important indicators suggested upward pressure on pay was intensifying.

For example, the average annualised rate of growth of private sector pay, excluding bonuses, reached 3.5 per cent over the three months to October.