Since the end of the recession, a number of sectors within the British economy have shown marked improvements as a result of increased investment into growth. However, arguably the most positive impact the upturn in the economy has yielded is the national unemployment rate, which fell again in the first quarter of the year.
At present, the unemployment rate now stands at 6.8 per cent, after the three months to March saw 133,000 people find work. This means that the number of people out of work now numbers 2.2 million – the lowest figure in five years, according to the Office for National Statistics (ONS).
In addition, the number of people in work has now reached 30.43 million, marking the highest figure since records began in 1971. Self-employment contributed massively to this, with a record 4.5 million currently working for themselves, while youth unemployment took the most positive steps seen in five years towards improvement, falling by 48,000 to 868,000.
Head of business services at KPMG, Bernard Brown, believes this news indicates that further economic upturns are in store.
He says; “More people in employment, more jobs being created and more money in starting salary pay packets all point towards continued growth, greater confidence and a return to a buoyant labour market.
“For those people lucky enough to be changing jobs, today’s news is a welcome confirmation that their decision to dip their toes in the jobs market looks like being the right one.”
Unfortunately, average earnings failed to make any similar steps towards progress, remaining unchanged at 1.7 per cent up on a year on year basis. Considering that the retail prices index, which takes into account housing and general living costs, stands at 2.5 per cent in the year to March, real wage growth has still not managed to catch up with the true cost of living in the UK today – meaning that consumers are still likely to be feeling the pinch despite the wealth of price drop campaigns currently being run by supermarkets.
World First chief economist, Jeremy Cook, believes that we should treat the results of the ONS’s report with caution for this very reason.
He says; “We have seen the biggest quarterly improvement in employment since records began in 1971 over the past three months – unfortunately, this has not come with a continued rise in ‘real wages’, with average earnings only rising by 1.7 per cent, the same as last month.
“The disappointment surrounding real wages outweighs any positive sentiment coming from the fall in the overall rate of unemployment to 6.8 per cent.
“This lack of wage inflation will keep overall CPI lower in the short term and, more importantly, will allow the Bank of England to maintain low rate expectations into next year.”
