Unemployment Falls in Three Months After Brexit Vote to 11 Year-Low

(REUTERS) – Britain’s unemployment rate fell in the first three months after the Brexit vote to its lowest level in 11 years but there were some signs that a slowdown in the labour market could be coming.

The unemployment rate edged down to 4.8 percent in the July-September period, compared with a median forecast of 4.9 percent in a Reuters poll of economists.

But the number of people in work rose by 49,000, the slowest increase since the three months to March this year, the Office for National Statistics said.

Britain’s economy weathered the initial shock of the Brexit vote in better shape than the Bank of England and almost all private economists expected.

However, unemployment is widely expected to rise as companies wait for more clarity on the country’s future ties to the European Union, which could take years to emerge.

The BoE expects the unemployment rate to stand at 5.6 percent in two years’ time and a survey of employers published on Monday by the Chartered Institute of Personnel and Development (CIPD) showed companies cutting back on hiring plans in late 2016.

The number of people claiming unemployment benefits in October rose by 9,800, the biggest rise since May, the ONS said, adding its measure of claimants had been revised up to take into account changes to the benefit system.

September’s claimant count increase was revised up to 5,600 from a previous reading of 700.

Economists taking part in the Reuters poll had expected the number of benefit claimants – which is considered to be a potential early warning sign of an economic downturn – to rise by 2,000.

The ONS said workers’ total earnings including bonuses rose by an annual 2.3 percent, unchanged from their pace in the three months to August. Economists taking part in the Reuters poll had expected growth of 2.4 percent.

Excluding bonuses, earnings rose by 2.4 percent year-on-year, the fastest increase in a year and in line with expectations in the Reuters poll.

The CIPD survey published on Monday showed employers expected to make basic pay settlements of just 1.1 percent in 2017, putting a squeeze on living standards as inflation is expected to rise to around 3 percent or more after the recent fall in sterling.

Separately, the ONS said productivity growth slowed in the third quarter.

Output per hour growth fell to 0.2 percent compared with the previous three months, slowing from growth of 0.6 percent in the second quarter and the weakest improvement since late 2015.

(Reporting by William Schomberg and David Milliken)