Wage growth in the UK has slowed for the third month running in a renewed squeeze on living standards, despite employers continuing to hire workers against a backdrop of Brexit uncertainty.
The Office for National Statistics said annual growth in average weekly earnings dropped to 3.2% in the three months to the end of October, when the Brexit deadline loomed – down from 3.6% a month earlier.
Average weekly pay growth excluding one-off bonuses also dropped slightly to 3.5%, down from 3.6% in September.
Despite the slowdown in wage growth, unemployment remained at 3.8%, the lowest level since the mid 1970s, while employers continued to hire new workers in the run-up to the Brexit deadline.
The number of people in work increased by 24,000 to a record of 32.8 million, confounding the expectations of City economists for a reduction of about 10,000 as Britain braced for departure from the EU.
Tej Parikh, the chief economist at the Institute of Directors employers’ group, said the continued jobs boom was a plus for the wider UK economy, although he warned there were signs the labour market was losing momentum.
In a sign of caution among employers, job vacancies have fallen for 10 months in a row and are below 800,000 for the first time in more than two years. The decline in wage growth also likely reflects mounting unease among companies.
Parikh said: “As demand for new workers has slowed, it is also inevitable that wage growth has also decelerated a little recently.”
The ONS said the increase in employment in the latest quarter was driven by a rise in the number of men entering the workforce and full-time employees hitting a record high of 20.7 million.
However, the number of women in employment fell by 30,000 in the three months to October and part-time employment fell by 61,000.
John Philpott, the founding director of the Jobs Economist consultancy, warned there were clear signs of weakness in the private sector, saying that job creation in the public sector was helping to support the labour market. Private sector employment fell by 3,000, with significant losses in construction and retail, while job numbers in the public sector rose by 27,000.
Against a backdrop of higher government spending after a decade of austerity, he said: “We may now be on course for faster growth in public sector employment than seen throughout most of the past decade.”
Thérèse Coffey, the work and pensions secretary, said more people were benefiting from rising wages and record high employment. “Six out of the nine UK regions have seen an increase in the number of people in work in the last year and I want to see it continue to rise in every part of the country,” she added.
