-Paul Hollingsworth, Capital Economics
The unemployment rate in the UK fell to its lowest level in more than a decade in May, a sign the labor market continued to strengthen in the run-up to Britain's referendum on membership of the European Union, while average weekly earnings edged up in the same month. The unemployment rate in the UK came in at 4.9% in the fifth month of the year, unaffected by the Brexit fears before the referendum. The unemployment rate in the UK measured on a three months moving average basis, therefore, fell below the level of the natural, or non-inflationary, unemployment level of 5.0% estimated by the Bank of England. Meanwhile, the number of people in work rose to another record high, reaching 31.7 million. Initial jobless claims showed slightly worsening labor market conditions in the UK during the Brexit month, as the index revealed 400 new people claimed unemployment benefits in June. In the meantime, a separate report showed that the claimant count ticked up by 400 between May and June, but more strikingly, the April-May rise was revised up to 12,200 from an originally reported fall of 400.
The Office for National Statistics also reported that average weekly earnings registered a rise of 2.2% excluding bonuses in May, while the indicator advanced 2.3% including bonuses in the same month.
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