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USA Real Estate Blog

UK hiring falls by most in over four years as Brexit nears

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LONDON — Britain’s jobs boom has weakened

in the approach to Brexit with the number of people in work

unexpectedly falling by the most in over four years and

unemployment rising, official data showed on Tuesday.

Employment fell by 56,000 to 32.69 million in the three

months to August, the Office for National Statistics said.

Economists polled by Reuters had expected growth of 23,000.

The number of people out of work rose by 22,000 to just over

1.31 million, the ONS said.

Britain’s strong labor market has been the silver lining

for the economy since the Brexit referendum in 2016, something

many analysts attribute, in part, to firms hiring workers that

they can later lay off rather than making longer-term

commitments to investment.

But there were signs in Tuesday’s figures that employers

were turning more cautious.

The unemployment rate unexpectedly rose to 3.9% from a 3.8%,

which had been its joint lowest since the mid-1970s, while

vacancies fell to their lowest level since the three months to

November 2017.

“Challenging economic conditions are starting to take the

shine off the UK’s job boom,” Tej Parikh, chief economist at the

Institute of Directors, an employers group, said.

“Business leaders’ long-lasting drive to expand their

workforce has put the labor market in a strong position.

However, firms are now increasingly coming up against

uncertainty and the shrinking supply of available talent.”

Many employers are worried about Prime Minister Boris

Johnson’s pledge to take Britain out of the European Union on

Oct. 31 without a transition deal to smooth the economic shock

if necessary. However, lawmakers have passed legislation that

they say will force him to seek a delay from Brussels.

A survey published separately on Tuesday by Britain’s main

auto industry group showed jobs cuts at one in three firms in

the sector, which risks being a big loser from Brexit. That was

up from one in eight just under a year ago.

As well as worries about Brexit, Britain’s economy is

feeling the drag from rising U.S-China trade tensions which have

weighed on global growth.

The ONS labor market data showed a dip in the pace of pay

growth which recently hit its fastest in more than 10 years.

Total earnings growth, including bonuses, rose by an annual

3.8% in the three months to August, slowing from 3.9% in the

three months to July and weaker than the median forecast of 4.0%

in the Reuters poll.

Excluding bonuses, which smoothes out some volatility, pay

growth similarly slowed slightly to 3.8%, but was a touch ahead

of the Reuters poll forecast of 3.7%.

The trend in pay growth is being watched closely by the Bank

of England.

Deputy Governor Dave Ramsden said in a newspaper interview

published on Sunday that wage costs were “picking up quite

significantly, which will drive domestic inflationary pressure.”

However, the BoE is waiting for more clarity on Brexit

before any decision to resume its gradual and limited program

of interest rates hikes.

(Writing by William Schomberg; Editing by Catherine Evans)

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