UK labour market continued to strengthen in the months prior to referendum

According to official figures released by the Office for National Statistics (ONS) on Wednesday UK unemployment rate fell to its lowest level since the period between July and September 2005, after declining from 5 percent to 4.9 percent in May and compared with forecast for an unchanged reading. In the corresponding period last year, the unemployment rate stood at 5.6 percent.

The number of unemployed people in the UK fell by 54,000 to 1.65 million between March and May, compared to the previous three months. Unemployment fell by 201,000 compared to the corresponding March to May period in 2015.

“Today’s employment and wage figures are proof that the fundamentals of the British economy are strong,” said the Chancellor Philip Hammond.

Labour market data tend to lag economic developments. It will be some time before the change in economic circumstances in the aftermath of the referendum, both in terms of demand and supply, will feed through to the labour market.

UK labour market continued to strengthen in the months prior to the referendum but the impact of the Brexit vote could soon change the picture. Official labour market data relating to the post-referendum period will not be available until September. Positive data is unlikely to stand in way of Bank of England stimulus measures.