UK labour market edges closer to 'full capacity', employment hits record high of 74.6 pct in Q4 2016

Data from the Office for National Statistics (ONS) published on Wednesday showed that employment in the U.K. hit record high of 74.6 pct in Q4 2016. The number of people in full-time employment rose by 45,000 in the three months to December. 

The number of jobless fell 7,000 in the fourth quarter to 1.6 million people, leaving the unemployment rate at 4.8 per cent, the lowest in more than a decade. Data published on Wednesday also showed that average earnings were 2.6 percent higher over the fourth quarter compared with the same period a year earlier.

While employment is still rising, the pace has cooled over the past year. Uncertainty as Britain prepares Brexit process is likely to take a further toll on hiring. BOE officials now believe there is more slack in the labor market than previously thought, which should keep a lid on wage demands.

Even if trends in labour market tend to lag economic activity, solid labour market momentum in today’s data is another confirmation that no real slowdown in the UK economy is yet apparent.

“Overall, the labour market appears to be edging towards full capacity,” said David Freemen, senior statistician at the ONS.