May 29, 2017

United Kingdom unemployment hits lowest level in 42 years

19 May 2017, 08:01 | Taylor George

"Air fares were the main contributors to the increase in the rate in April 2017, although this balanced out a downward effect of similar magnitude in March 2017 and is due to Easter falling later than a year ago", the Office for National Statistics (ONS) said in a statement.

"I still expect interest rates to remain at their current low level for some time yet given the slowdown in economic growth observed in the first quarter of this year, the pressure on real wage growth and the upcoming Brexit negotiations", he said.

Average weekly earnings excluding bonuses increased by the three months to March, while inflation rose by 2.3% in the year to March 2017.

"But the fact that wage growth is not keeping up with price inflation does not bode well for consumer spending - which has been a key factor contributing to United Kingdom economic growth in recent years".

Bank of England Governor Mark Carney said that 2017 would be a challenging year for consumers with rising inflation leading to a fall in real wages.

The figure climbed from 2.3% in March, with the ONS citing climbing air fares as the main contributor, as well as rising prices for clothing, vehicle excise duty and electricity.

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Mark Carney, the Bank's governor, also warned that this year "will be a more challenging time for British households", but said the forecasts also assumed a "significant" pick-up in wage growth if the United Kingdom negotiates a smooth exit from the European Union.

Consumers have been forced to tighten their belts since the pound's Brexit-induced fall over the past year pushed up the up the cost of living, the Bank of England said.

At the same time, inflation is heading toward 3 percent this year, squeezing consumer spending.

Data released on Tuesday showed consumer price inflation picked up speed in April to hit 2.7 per cent and many economists think it will reach 3 per cent soon.

However, the claimant count increased by a seasonally adjusted 19,400 in April, compared to expectations for a gain of 7,500 people and following a rise of 33,500 a month earlier, whose figure was revised from a previously reported reduction of 25,500. Analysts had expected inflation to increase to 2.6 per cent.

Factory output prices - a guide to future consumer price pressures - increased 3.6 percent, unchanged from the previous month and above forecasts of a 3.4 percent annual increase in the Reuters poll.

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