UK Analysis: Q2 Real Wages Fall As Unemployment Falls>

-UK April-June Real Regular Earnings -0.5% 3m/year-ago vs -0.5% Mar-May

-UK April-June Real Total Earnings -0.5% 3m/year-ago vs -0.6% Mar-May

-UK April-June Employment +125,000; Unemployment Rate down to 4.4%

By Laurie Laird and Jamie Satchithanantham

     London (MNI) - UK regular earnings declined in inflation-adjusted 

terms in the second quarter, for the fourth consecutive three-month 

period, even as unemployment fell to a new 42-year low.  

     Joblessness, as measured by the Labour Force Survey, fell to 4.4% 

between April and June, in line with the median forecast, from 4.5% in 

the three months to May, the lowest level of unemployment since the 

three months to June of 1975. 

     The outturn matched the 4.4% jobless rate forecast of Bank of 

England staff for the three months to June, as published in the August 

Quarterly Inflation report. 

     But the steady fall in joblessness has failed to translate into 

higher earnings, with real wages declining in the second quarter over 

the same period of 2016, after dipping into negative territory earlier 

this year. 

     Total weekly earnings increased by an annual pace of 2.l% in the 

three months to June, well above the MNI median forecast of 1.8%, up 

from a 1.9% gain in the previous three months. But with inflation 

touching 2.6% in June, real wages, including bonuses, actually declined 

by 0.5% in the second quarter, albeit by a slightly slower pace than 

recorded in the three months to May.  

     In the month of June, total earnings rose by an annual rate of 

2.8%, with real wages increasing by 0.5% over the same month of 2016, 

reversing two months of decline.  

     A 17.2% rise in bonuses in the month of June, contributing to a 

2.9% rise in the three months to June, lifted total earnings. Bonuses 

were concentrated in the financial services sector, according to a 

National Statistics official. 

     Excluding bonuses, regular earnings, before adjusting for 

inflation, improved by an annual pace of 2.1% in the three months to 

June, above the MNI median of a 2.0% gain, up from 2.0% in the previous 

period.  Price-adjusted regular earnings fell by 0.5% over the same 

period a year earlier, matching the decline recorded in the three months 

to May, and the fourth straight three-month fall. 

     Regular earnings rose by an annual rate of 2.1% in the month of 

June, but fell by an annual rate of 0.4% in real terms. 

     Employment rose by 125,000 to 32.07 million, compared to the median 

MNI forecast of an 100,000 jump, after a increase of 175,000 in the 

three months to May. That took the employment rate to a record-high 

75.1%. 

     Unemployment fell by 57,000 in the second quarter, to 1.48 million, 

as inactivity declined by 64,000 to 8,77 million, taking the inactivity 

rate to a record-low 21.3%. 

     The number of self-employed workers rose by 21,000 to a record-high 

4.805 million, taking the self-employed to a 15.0% of all workers. 

     The jobless rate fell to 4.2% in the month of June, from 4,4% in 

May, according to experimental data, touching the lowest level since 

records began in 1992, according to the official. 

     The more up-to-date claimant count fell by 4,200 in July, 

leaving the associated unemployment rate at 2.3%, unchanged from June.  

     The claimant count for June was revised to show a 3,500 gain, 

compared to the 6,000 rise reported last month. 

-London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com

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