The slowdown in employment growth wasn’t as large as predicted in the three months to August, as unemployment figures held steady at 4.9%, according to the latest figures.
The latest Office for National Statistics (ONS) labour market statistics revealed there were 31.8 million people in work between June to August, a 106,000 increase from March to May 2016.
The ONS reported a “small” increase in unemployment of 10,000 in the three months to August due to more people looking for work.
The body said: "These figures show that employment continued to grow over the summer and vacancies remain at high levels, suggesting continuing confidence in the economy.”
Whilst the latest figures show that Brexit hasn’t had much of an effect of employment figures, the economic uncertainty brings a more serious threat, as the prospect of shrinking wages looks highly likely.
The UK’s wage growth has fallen for two months in a row now and August saw a slight drop from 2.4% in July to 2.3%. However, with annual inflation at its highest level for two years, already rising to 1% from 0.6% in August, there is a high chance inflation will be higher than wages.
Samuel Tombs, chief economist, Pantheon Macroeconomics said “Slow growth in productivity and the weakening of firms’ appetite for new hires suggests that wage growth will remain stuck within a 2%-2.5% range over the next year. Accordingly, households look set to endure a renewed period of falling real wages as inflation picks up to average 3% or so in 2017.”
Although it’s unclear how long this would last, during the financial crisis in 2008 when the pound dropped significantly, it took three years for inflation to peak.
Mariano Mamertino, Indeed economist, said: “While average wage rises are still modest, rising prices are starting to erode workers’ purchasing power. For the two to be moving in opposite directions is an uncomfortable reminder of the painful years Britain suffered after the financial crisis.
“There’s a sad irony in that many of those who feel left behind by globalisation – and who were most likely to vote for Brexit – are now the most likely to be caught in the vice of rising inflation and falling real wages, as many spend a higher share of their earnings on basics such as food and fuel.”