UK Unemployment Hits 7-Year Low; Wage Growth Lower Than Expected

Britain’s unemployment rate between June to September fell to its lowest in seven years, the Office for National Statistics said, Wednesday. Employment also hit a record high during the quarter with 73.7 percent of the population working at least one job, ONS said.

The unemployment rate fell to 5.3 percent, below an analysts’ forecast of 5.4 percent, according to a Bloomberg News survey. Employment surged by 177,000 people to 31.2 million.

However the report noted that wage growth had slowed over the year. Earnings, excluding bonuses, rose by 2.5 percent for the quarter, down from 2.8 percent in the previous three months. Earnings rose by 3 percent in the quarter, helped by bonuses that rose 15 percent.

The slow rise in wage growth may prompt the Bank of England to continue the freeze on interest rates. Central bank Governor Mark Carney said that the "[unemployment] rate will probably average 5.2 percent next year and 5 percent in 2017," according to reports.

Carney also told Sky News in an interview Wednesday that the decision on when to increase interest rates from a record low will "get more difficult” as wages pick up.

Stronger-than-expected employment numbers in the U.S. have bolstered expectations that the Federal Reserve will raise interest rates -- its first such move in nine years -- in December.

“The slowdown in the pace of the UK's pay recovery may signal that the rebound enjoyed during much of 2015 has eased,” Matt Whittaker, chief economist at the Resolution Foundation think tank, told the Wiltshire Times. “Signs of a return to productivity growth should generate more upward pay pressure,” he added.