UK unemployment falls to new 42-year low


Workers installing rail track.


Jobs were created in the construction and transport sectors

Unemployment in the UK fell by 57,000 in the three months to June, official figures show, bringing the jobless rate down to 4.4% – its lowest since 1975.

The squeeze on real incomes continues to grow, though at a slower pace.

Average weekly earnings increased by 2.1% compared with a year earlier – slightly higher than last month’s 2% increase.

But with inflation standing at 2.6%, real earnings still fell by 0.5%, the ONS figures showed.

At 75.1%, the proportion of people in work is the highest it has been since 1971 – partly due to the introduction of a later state pension age for women.

There were 32.07 million people in work in the three months to June – 338,000 more than for the same period last year.

“The employment picture remains strong, with a new record high employment rate and another fall in the unemployment rate. Despite the strong jobs picture, however, real earnings continue to decline,” said Office for National Statistics senior labour market statistician Matt Hughes.

Jobs were created in the construction, accommodation and food services sectors and transport and storage industries.

Ruth Gregory, UK economist at Capital Economics said the figures gave some signs that the tighter labour market was leading to a recovery in wage growth.

“Inflation is likely to fall back next year as the impact of the drop in the pound dwindles. What’s more, the tightness of the labour market should deliver further rises in nominal wage growth over the coming quarters,” she said.

The pound rose against both the dollar and the euro following the positive news on jobs, recovering some of the ground lost on Tuesday.

However, productivity – or output per worker – continued to decline, the ONS said, issuing preliminary figures for the second quarter. Productivity was 0.1% lower than in the first quarter and “remains at around the same level as its pre-downturn peak”.

The number of workers born elsewhere in the EU continued to increase, but the annual rate of change has slowed markedly, the ONS added.

The number of people on zero hours contracts as their main job fell 20,000 compared to a year earlier to 883,000 people.

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