UK Employment Falls Slightly In October

The jobs market stagnated in the three months to October, according to the latest jobs report from the Office for National Statistics, suggesting employers are finally slowing their hiring in the wake of June's Brexit vote.

The number of people in work fell by 6,000 in October to 31.76 million people, the Office for National Statistics said on Wednesday. While the decline was small, and the jobless rate was unchanged at 4.8 percent, the statistics office said the labor market “appears to have flattened off in recent months.”

The UK unemployment rate held at 4.8% for October, which was in line with expectations and equalled the lowest rate since September 2005.

“This is the first genuine disappointment we have seen in the hard data since the Brexit vote,” said Alan Clarke, an economist at Scotiabank in London. “This has been a gradual deterioration” and “is bad news for spending growth next year.”

Meanwhile, the number of people claiming unemployment benefits rose by 2,400 in November to 809,000.

However, the drop in employment was small and the labour market has had several such blips and mini-slowdowns in the past few years, only to pick up speed again.

The single-month data recorded an increase in unemployment to 4.9% from 4.6%, which also suggests there may have been a weaker trend in October, although monthly data will be erratic.

Average pay growth picked up more than expected to 2.6%, or 2.5% excluding bonuses, from 2.4%. But the number of people aged under 16years and over 64 considered “economically inactive” – out of work and neither seeking nor available to work – jumped by 76,000 over the period to 8.9 million.

Economists are sceptical that wage growth will continue to strengthen in the face of higher inflation and post-Brexit uncertainties for companies.­­­­

Analysts were of course downbeat about the figures,

"The UK has experienced a rapid deterioration in job creation, giving the sense that Brexit uncertainty is now becoming a drag on the economy", said James Knightley of ING.

"Cracks are beginning to appears in the labour market," agreed Howard Archer of IHS Global Insight.

The pound sterling was little changed after the data with GBP/USD blocked below 1.2700 with EUR/GBP holding just below 0.8400.

The figures come a day before the Bank of England announces its latest policy decision, when it’s forecast to keep its key interest rate at a record-low 0.25 percent. After cutting the rate in August, policy makers have since warned of inflation risks because of the pound’s drop since the U.K. voted in June to leave the European Union.