UK unemployment declines unexpectedly in Dec, labor market remains strong despite 'Brexit' vote

UK unemployment fell by 52,000 to 1.6 million in the three months to November in the latest sign that the UK economy has so far avoided a Brexit-related shock. Unemployment was at the lowest level for more than a decade - official figures showed on Wednesday.

Office for National Statistics said jobless rate was steady at an 11-year low of 4.8 percent. employment rate was steady at a record 74.5 percent, while wage growth picked up pace. Average weekly earnings excluding bonuses increased by 2.7 percent compared with a year earlier. Growth in pay including bonuses rose 0.2 percentage points to 2.8% for the year to November.

David Freeman, senior statistician at the ONS, said: “While employment is little changed on the quarter, the rate remains at an historical high. The rate at which pay is increasing continues to pick up in cash terms, though it remains moderate.”

Solid activity data at the end of 2016 means that another Bank Rate cut and an expansion in the QE programme are unlikely any time soon. In fact, with inflation rising sharply during the first half of the year, we would expect to see speculation that the BoE could turn hawkish.

"Recent data challenges the Bank of England’s expectation that a slowdown in the economy is in the offing. Ongoing strength in activity over Q1 and into Q2 would be likely to raise calls from some on the MPC that the emergency stimulus administered in August 2016 should be withdrawn." said Lloyds bank in a report.