Employment rate hits record high as wages reach new post-financial crisis peak
Employment rose to a record high in the three months to November as wage growth hit a 10-year peak, according to official data released today.
The number of people in paid work rose by 141,000 people to 32.53m, the Office for National Statistics said, giving a record employment rate of 75.8 per cent.
Sterling surged from 1.286 against the dollar before the news to as high as 1.292 following the figures, before slipping back to 1.29.
Read more: Wages hit 10-year high as EU nationals leave UK
Wages grew 3.3 per cent compared to last year, posting their highest annual growth rate since September to November 2008.
However, in real terms salaries rose 1.1 per cent to a two-year high.
ONS head of labour market David Freeman said: “The number of people working grew again, with the share of the population in work now the highest on record.
“Meanwhile, the share of the workforce looking for work and unable to find it remains at its lowest for over 40 years, helped by a record number of job vacancies.
“Wage growth continues to outpace inflation, which fell back slightly in the latest month.”
Over November, average total pay for UK workers including bonuses rose to £527 per week up from £510 a year ago.
However, excluding inflation earnings rose just £5 per week to £495, down from the pre-financial crisis peak of £525.
Samuel Tombs, chief economist at Pantheon Macroeconomics, said the rise in wages strengthens the case for an interest rate rise “even if the Brexit outlook remains uncertain”.
“The chances of the Monetary Policy Committee raising [interest rates] in February are remote, but the committee will want to signal strongly that another hike is not far off and that it could hike before Britain has left the EU, given the risk that the departure could be delayed beyond March,” he said.
While he added that the wage growth will slip over the next six months due to pay negotiations and a lower public sector wage rise, the rate should stay above three per cent.
However, Yael Selfin, chief economist at KPMG UK, warned that businesses are facing an increasing shortage of workers as the number of candidates applying for vacancies falls.
Read more: Bank of England keeps interest rates steady
“The ability to find the right staff will be an acute concern for UK businesses,” she said.
“The UK labour market could enter a perfect storm of declining worker availability and a tight domestic labour market.
But Andrew Wishart, UK economist at Capital Economics, disagreed, saying the labour stats "showed no sign of any hit to firms’ hiring from Brexit".
He added: "Note that vacancies, which are more forward looking, rose to a fresh record high. And more timely surveys of hiring suggest that employment growth has maintained the annual growth rate of 1.0 per cent recorded in November."