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UK labour market cools as growth slows, Brexit vote looms

People walk past clocks in the Canary Wharf business district of London, Monday Oct. 13, 2008. The British government injected an unprecedented 37 billion pounds (US$63 billion) into the country's leading banks Monday to avoid a full-scale collapse of the sector. In return for the rescue, the Royal Bank of Scotland Group PLC, Lloyds TSB Group PLC and HBOS PLC will cede major stakes to the government and halt cash bonuses for bank board members this year. (AP Photo/Matt Dunham)

 

Bloomberg

The U.K. jobs market showed signs of cooling in the first quarter as Britain prepares for an increasingly bitter referendum on its European Union membership.
The number of people in work rose by 44,000, less than a quarter of the gain seen at the end of 2015, the Office for National Statistics in London said on Wednesday. Unemployment fell 2,000, leaving the jobless rate at a decade-low 5.1 percent, as forecast by economists. The employment rate edged up to 74.2 percent.
There were also few signs of wage pressure. Annual pay growth excluding bonuses slowed to 2.1 percent from 2.2 percent in the three months through February. Total pay inflation edged up to 2 percent from 1.9 percent.
The report adds to signs that firms are putting hiring and investment on hold as polls suggest the June 23 Brexit vote could be close.
Job vacancies fell 18,000 to 745,000 in the three months through April, the first decline since the second quarter of last year.
Economic growth slowed in the first quarter and recent surveys point to a further loss of momentum. ONS statistician Chris Freeman said there is evidence that the jobs market “could be cooling off.”
Global Slowdown
Even without the referendum, the labor market might have struggled to maintain the performance seen in the last three months of 2015, when employers added almost 200,000 people.
Slowing global expansion took its toll on manufacturers in the first quarter. At the same time, labor shortages and a new higher minimum wage in April mean firms may now be looking to boost efficiency rather than staffing levels.“The momentum of job creation has eased in recent months and we still haven’t seen lift-off for wages,” said Ian Stewart, chief economist at Deloitte. “‘Real wage growth has slowed in the last year, a development that represents a real risk to the consumer-led recovery.”
The increase in employment in the first quarter was just sufficient to absorb an extra 42,000 economically active people and the number of unemployed dipped as a result.

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