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United Kingdom unemployment lowest in over 40 years

19 May 2017

The unemployment rate fell to 4.6 percent, according to the Office for National Statistics, with the number of people unemployed falling by 53,000 to 1.54 million in the three months to March.

Capital Economics UK economist Paul Hollingsworth says while modest nominal wage growth may not be enough to keep up with inflation this year, which he expects to peak just over 3 per cent, next year is a different story.

An earlier government statement claimed March data pointed to an "annual house price increase of 4.1 percent which takes the average property value in the U.K.to £215,847 ($278,000)".

Despite the prospect of inflation rising further away from the Bank of England's 2% target, economists have dismissed the chances of an imminent interest rate rise, pointing to the squeeze on household incomes.

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Inflation hit its highest level in almost four years last month as the Brexit-hit pound, electricity price hikes and rising air fares tightened the squeeze on consumer spending. It also underlined the gloomy message from Bank of England Governor Mark Carney, who last week stressed consumers were in for "challenging times" this year.

Based on a seasonally-adjusted term, the overall CPI for April decreased 0.3 per cent, compared to March 2017.

"The Economic Policy Centre have noted how far recent economic growth in Northern Ireland has been driven by consumer spending", he said.

The markets are now projecting a higher inflation ahead although analysts and economists commented that the market is now underestimating the already high inflation rate which would go on in the near future.

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However, net inflation, which strips out fuel prices, grew 1.2% and influenced core inflation by 0.10pp.

Excluding bonuses, earnings rose by 2.1 per cent year-on-year, the weakest increase since July of last year and below expectations for a 2.2 per cent rise in a Reuters poll of economist.

Airfares climbed 12.8 per cent in the month from February, but overseas accommodation costs fell 9.2 per cent, as the transport and foreign travel sector saw a 1.9 per cent increase in prices in March. Electricity and food prices also went up, but there were falls in the cost of gas, petrol and diesel.

CPIH - which includes CPI and owner occupiers housing costs - hit 2.6% in the month, again up significantly from March.

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United Kingdom unemployment lowest in over 40 years