UK labour market continues to strengthen, as jobless rate falls to 5.1%

The UK unemployment rate unexpectedly declined to the lowest level in almost a decade, while wage growth slowed less than predicted as the labour market continued to improve. Wages excluding bonuses climbed 1.9% in the quarter to November from a year earlier, down from 2% in the three months through October, the Office for National Statistics reported. Meanwhile, total pay growth, including bonuses, slowed to 2% in the three months through November from 2.4% in the previous period. There were 267,000 more people with jobs in those three months, when compared to the previous quarter, and 588,000 more than a year ago. As a result, the employment rate rose to 74.0%, the highest level since records began in 1971. The jobless rate dropped to 5.1%, the lowest since the three months through January 2006.

The earnings data came in line with Bank of England Governor Mark Carney comments, when he referred to weaker wage growth as one of the main factors in deciding to refrain from immediate interest rate hike. In addition, Carney cited ongoing decline in oil prices and volatility in China. Thus, the central bank is likely to remain in a wait-and-see mode for some time to come, while investors shift their bets for rate hike into 2017.