United Kingdom unemployment hits 40-year low

Champagne

Champagne

Russ Mould, investment director at AJ Bell, said: "An acceleration in wage growth for British workers may put the Bank of England on a state of alert when it comes to the next interest rate increase but the nation's retailers may be pleased to see it after a very hard start to the year".

The latest Consumer Price Index inflation figure is 2.7% and is expected to remain unchanged when new figures are published on Wednesday, signalling an end to the squeeze on earnings.

The unemployment rate fell from 4.7 percent a year earlier to its lowest level since 1975, according to the Office of National Statistics (ONS).

The ONS figures show there were 1.42 million unemployed people in the figures for February, 16,000 fewer than for November 2017 and 136,000 fewer than for a year earlier.

The return to real terms wage growth will revive hopes for the high street, where retailers have been struggling thanks to the strain on consumers' finances.

"Employment rose again in the three months to February, to reach its highest ever rate since records began".

But while a May rate increase is all-but priced in by investors, not everyone is convinced that the labour market is running out of slack.

United Kingdom unemployment rate falls from 4.3% to 4.2%.

Some economists warn that the headline figures do not account for a significant increase in part-time work rather than full-time, a possible reason for the recent lack of strong wage growth. On average, people are still taking home less than they did before the crisis.

The report showed that, at the age of 30, four in 10 millennials live in private rented accommodation, double the rate for the previous generation and four-times that of baby boomers. The inactivity rate also declined to a record low.

Tuesday's wage data adds fuel to the argument that the Bank of England will likely increase interest rates at the next meeting of its Monetary Policy Committee in the first week of May.

"A close above this level will set off more alarm bells to buy", said Neil Jones, head of hedge-fund sales at Mizuho Bank. "Any sign of further real-wage growth is a textbook positive for a currency". It was little changed at 86.31 pence per euro.

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