The U.K. unemployment rate fell to the lowest level in more than 10 years in the three months to May, reflecting strength in the labor market ahead of the 'Brexit' vote.
The unemployment rate fell to 4.9 percent in the three months to May from 5.6 percent a year earlier, the Office for National Statistics said Wednesday.
The jobless rate was expected to remain at 5 percent, the same as in the three months to April. The last time the figure was lower was in July to September 2005.
The latest labor market figures showed that despite the referendum looming at the time, the jobs recovery remained in fine fettle in the second quarter, Paul Hollingsworth, a U.K. economist at Capital Economics, said.
But this should not prevent the the Bank of England from loosening policy at its August meeting, he added.
IHS Global Insight Economist Howard Archer said following the vote to leave the EU, the UK now seems set for a substantial loss of economic momentum and markedly weakened business confidence, which is a damaging combination for employment prospects.
Consequently, the economist expects the unemployment rate rising to 5.3 percent by the end of 2016 and to 6 percent by the end of 2017.
There were 1.65 million unemployed people, 54,000 fewer than for the 3 months to February 2016, the ONS said.
At the same time, the number of people in work rose 176,000 to 31.7 million. Consequently, the employment rate reached 74.4 percent, the highest since comparable records began in 1971.
Average weekly earnings including bonuses increased 2.3 percent and earnings excluding bonuses climbed 2.2 percent compared with a year earlier.
The claimant count held steady at 2.2 percent in June, in line with expectations. The number of people claiming unemployment benefits increased marginally by 400 from May, while it was expected to increase by 4,000.
According to Agents' summary of business conditions, published by the Bank of England, employment growth intentions had slowed a little further, partly reflecting deferrals of some recruitment decisions prior to the EU referendum.
Growth in labor costs per employee had edged lower, largely reflecting some reduction in bonus and commission payments, the report showed.
by RTT Staff Writer
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