The UK unemployment rate continued its staggering downward trajectory in the three months to April this year, with the latest figures released by the Office for National Statistics indicating that the nationwide rate has fallen to just 6.6%.
The news means that an estimated 30.5 million people are now in some form of employment in the UK, representing a record rise of 345,000 during the first three months this year, whilst just 2.16 million individuals currently enjoy no form of work at present, representing a fall of 161,000 in three months to April.
However, the ONS had less positive disclosures on the growth in the average wage in the UK during the same period, with the quarterly rate of salary growth falling to just 0.7%, down from the 1.9% exhibited last month.
The ONS has attributed this steep fall to the late payment of bonus payments, with wage growth during the same period withstanding of bonuses being estimated to be 0.9%.
The total volume of unemployed individuals within the UK is now at its lowest point for over 5 years, with unemployment amongst the countryís youth now estimated to be just 853,000.
The latest figures will provide an election boost to the coalition government who have also had their prospects bolstered by ONS displaying that the number of individuals utilising the Jobseekerís Allowance dropped sharply by 27,400 to 1.09 million during May.
The Prime Minister, David Cameron, has heralded the news as a ìmajor milestoneî within the governments far reaching economic strategy and heralded his partyís conduct for the creation of ìtwo million new private sector jobs since 2010″.
However, Labour have argued that whilst unemployment has continued to fall at a brisk rate that nevertheless this positive direction has failed to be matched by wage growth, with shadow work and pensionís secretary Rachel Reeves saying that this underlying issue has resulted in “even people in work are struggling to make ends meet”.
Positive signs; Part time-fall, Full-time rise
The steep rise in employment figures in the three months to April was primarily down to new jobs made available within the private sector. During this time, around 103,000 people entered official unemployment in the public sector, though most of this was due to the reclassification of workers in Lloyds Bank to the private sector from the public.
Disregarding the classification changes made by Lloyds, just 11,000 people were made unemployed in the public sector during the first three months of this year, meaning that a credible 5.4 million are now in work within this area whilst a staggering 25.1 million are estimated to be in employment within the private sector, representing a 447,000 rise from the prior three month disclosure.
“The rise in employment this month is concentrated in full-time employees, not self-employment, which in the past has been used to ‘talk down’ the strength of the rise,” said David Tinsley at BNP Paribas.
“Indeed, there was a sharp fall in the proportion of people working part-time who say they are doing so because they can’t find a full-time job, which is one of the Bank of England’s favourite metrics of disguised slack.”
ëWage growth Achilles heel of recoveryí
Despite the fall in unemployment, leading economist analysts have argued that the latest ONS data has created a policy dilemma for the Bank of England committee tasked with deciding when to raise their base rate from its historic low of 0.5%.
“Labour market strength is the driving force behind calls for interest rate increases from the Bank of England, sooner rather than later, and today’s figures will add fuel to their fire,” said Jeremy Cook, chief economist at World First.
“However, wage growth has fallen to 0.7%, versus an expected 1.2%, and this is still a major cause for concern. As a result I am still expecting the Bank to hold policy right through into the second quarter of 2015, mainly courtesy of the lack of real wage increases.”
Currently, inflation as measured by the consumer price index stands at 1.8%, which has meant that the trend of wages growing at a slower rate than inflation has continued after a brief spell this spring where it was reversed.
“Weak pay growth and the ‘cost of living crisis’ remains the Achilles heel of the economic recovery,” said Chris Williamson, chief economist at Markit.
“But it should not be long until we see earnings growth accelerate as the labour market continues to tighten. Pay growth should pick up in coming months, perhaps significantly.”