LONDON – The proportion of workers in Britain has hit its joint-highest level since records began more than 40 years ago, official figures showed Wednesday in a further sign of the strength of the U.K. economic recovery.
The Office for National Statistics said that the employment rate of those aged between 16 and 64 rose to 73.1 per cent of the population in the three months through May, from 72.6 per cent in the previous three-month period. The rate last reached that level in February 2005 and hasn’t been higher since records began in 1971.
Meanwhile, unemployment fell to 6.5 per cent, 0.4 percentage points lower than the previous quarter. The rate is at its lowest since the height of the global financial crisis at the end of 2008.
The figures provide further evidence that the U.K. economy, Europe’s third-largest, is growing strongly, and reinforces expectations that the Bank of England will raise interest rates.
However, analysts noted that wage growth remained subdued in the U.K. — up just 0.3 per cent over the year — and that may stay the central bank’s hand. Subdued wage increases can keep a lid on inflationary pressures in an economy.
“The decline in unemployment is an encouraging sign that the U.K. labour market is improving, but today’s release comes with some bad news as earnings growth runs at a trickle,” said Scott Corfe, managing economist at the Centre for Economic and Business Research.
Higher-than-expected inflation figures for June, released Tuesday heightened speculation that the Bank of England would be raising interest rates, possibly by the end of the year. That fueled a further rally in the value of the pound, which rose to $1.7192 at one stage, its highest level since October 2008.
On Wednesday, it was down a modest 0.1 per cent at $1.7130.
More insights into the Bank’s thinking will emerge in August when it publishes its quarterly economic projections. Figures next week are also set to show that the U.K. economy continued to grow strongly in the second quarter.