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ONS unemployment figures: comment from Mariano Mamertino, EMEA economist at Indeed

Mariano Mamertino, EMEA economist at the global job site, Indeed, comments:

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“The unemployment rate hasn't been this low since the year Bohemian Rhapsody was released.

"With the number of people in work up and unemployment level down, rhapsodies of praise about the UK jobs market certainly won't be in short supply.

“On the surface the jobs market is firing on all cylinders but the UK labour market has been adding jobs at a much slower pace over the last six months so the big picture may not be as rosy as it seems.

“For those in the know, the only show in town has been a contest between wage growth and inflation. The two have been level pegging and wage rises are only just keeping pace. For now pay is rising at 2.3% so real wages are actually falling in real terms once you exclude bonuses.  

“This problem looks set to only worsen with CPI steadily rising and expected to exceed 3 per cent later this year. This is bad news for the pound in shoppers’ pockets and could have consequences elsewhere in parts of the economy that rely on consumer spending.

“Productivity growth is also still well below its pre-downturn trend and this is certainly one of the reasons why wage growth is struggling.

“Another warning light for the UK labour market is the fall in the number of Europeans looking for work in the UK which is down 18% since January. Employers in sectors dependent on foreign labour may struggle to get the workers they need.

“With Article 50 now triggered, these figures were borne out of a period of great uncertainty over Britain’s Brexit trade arrangements and that hasn’t gone away but the UK’s employers appear determined to press on regardless, perhaps spurred by sluggish rates of pay. 

“The latest Indeed Industry Employment Trends report shows that in February, hiring activity picked up significantly, rising in all but one of the 13 recruitment sectors tracked by the monthly index. However, just one was in positive territory over the year.”