- Samuel Tombs, Capital Economics
Britain's unemployment declined more than expected in August, hitting the lowest level in six years, while wage growth increased for a second straight month. The Office for National Statistics reported a drop of jobless rate to 6.0% drown from 6.2%, overshooting analysts' expectations for a 6.1% reading, as the number of people without job in the UK plunged below two million for the first time since 2008. While the data points to continued strength in the labour market, there are some signs of a slowdown. The number of people seeking unemployment benefit dropped the least since April 2013, falling 18,600 against a forecasted decline of 35,000. The claimant count rate fell slightly below last month's rate to 2.8%, in line with expectations. The last time it was lower was in July 2008.
Growth in average earnings, which includes bonuses, rose slightly higher than last month to 0.7%, but meeting analysts' expectations. Stripping out bonuses, pay rose 0.9% in the quarter through August from last year, up from 0.8%. The Bank of England is watching for signs of a pickup in labour costs as it ponders when to start lifting interest rates. Wednesday's data is unlikely to change the minds of the majority of policy makers, who have decided to keep rates on hold, especially after a sharp falling of UK's inflation in recent months.
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