UK loses most jobs since 2015 as labour market shows strain

By BLOOMBERG

LONDON • Britain shed jobs at the fastest pace in almost 2½ years between August and October in a sign that the labour market is slowing.

The number of people in work fell by 56,000, the most since the period through May 2015, the Office for National Statistics (ONS) said yesterday.

The decline exceeded the median forecast of economists.

Pay growth accelerated, though it still lagged well behind inflation, meaning a fall in real terms that’s forecast to continue into 2018.

The number of unemployed also declined in the period, leaving the jobless rate at a 42-year low of 4.3%. That’s because people left the labour force. A falling participation rate may be sign of weaker jobs demand, according to Bloomberg Economics.

In a further sign of weakness, figures for October alone show the unemployment rate rising to 4.4% from 4.2% in September.

Between August and October, there was an increase of 115,000 in the number of people classified as inactive.

“The unemployment rate held steady this month, but that masks pretty dismal employment growth statistics — the economy has been shedding jobs the past few months.

A little slack is opening up in the labour market and that’s likely to persist next year, and together with falling inflation, this should keep the Bank of England (BoE) on hold in 2018,” said Dan Hanson of Bloomberg Economics.

For BoE officials, the policy debate centres on the amount of slack remaining in the labour market, and some say there’s only a limited margin now.

The bank raised its key interest rate for the first time in more than a decade last month, saying supply constraints could fuel inflation, but questions remain about how the labour market will fare in the face of Brexit uncertainty and the prospects of slowing economic growth. Markets expect no further rate increases until late 2018.

Basic wages rose an annual 2.3% in the latest period, the highest since January, while pay including bonuses increased 2.5%, the fastest this year, the ONS said.

But both are still slower than inflation — now at 3.1%. While consumer-price growth is probably close to its peak, it’s expected to ease only slowly and there’s still no sign of a meaningful pickup in earnings growth.