February 15, 2017 / 9:39 AM / 7 months ago

UK wage growth slows in late 2016, employment picks up

FILE PHOTO - People look at job listings at the Careers and Jobs Live careers fair at the ExCeL centre in London April 19, 2009. REUTERS/Luke MacGregor/File Photo

LONDON , Feb 15 (Reuters) - British workers saw their pay grow more slowly than expected at the end of last year, official data showed on Wednesday, ahead of an expected squeeze on their living standards from higher inflation in 2017.

At the same time, the number of people in work rose in the three months to December after two previous monthly reports had shown employment falling.

Britain's labour market remained strong in 2016 despite the shock of the referendum decision in June to take the country out of the European Union.

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Wednesday’s data showed the unemployment rate in the period between October and December held at an 11-year low of 4.8 percent, in line with the median forecast for Wednesday’s figure in a Reuters poll of economists.

The employment rate hit a new all-time high of 74.6 percent in the last three months of 2016 as the number of people in work rose by 37,000.

With the labour market strong, the Bank of England is watching closely for signs of a quick pick-up in wages that could add to Britain’s inflation - which is already rising after the sharp fall in the value of the pound since the Brexit vote - and strengthen the case for an interest rate hike.

The ONS said on Wednesday that workers’ total earnings including bonuses rose by an annual 2.6 percent in the three months to December, slowing from 2.8 percent in the three months to November.

Economists taking part in a Reuters poll had expected wage growth of 2.8 percent in the October-December period.

Excluding bonuses, earnings rose by 2.6 percent year-on-year against expectations for a 2.7 percent rise.

The ONS also said the number of unemployment benefit claimants fell by 42,400 to 787,400 in January compared with a revised fall of 20,500 in December.

Economists taking part in the Reuters poll had expected the number of benefit claimants - which is considered to be a potential early warning sign of an economic downturn - to rise by 800.

ONS officials said the claimant count series was volatile due to the continued rollout of Britain universal credit benefit system.

Reporting by William Schomberg and Alistair Smout

Our Standards:The Thomson Reuters Trust Principles.
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