The continued strong performance of the UK's labour market highlights that consumers will remain the main drivers of the
economic recovery in 2015 and that the risk of near-zero inflation becoming ingrained is very low.
Employment rose by 202,000 in the three months to March, pushing up the employment rate to a new record high. And while a
strong expansion in the size of the workforce meant that unemployment fell by just 35,000 - the smallest fall since August 2013
- this was still sufficient to bring the unemployment rate down another notch, from 5.6% to 5.5%, notes Capital Economics.
Since the unemployment rate is now just a whisker above its average of 5.3% seen in the decade before the recession, it is
unsurprising that pay growth is beginning to recover. The headline (three month average) rate of annual growth in average
weekly earnings picked up from 1.7% to 1.9% in March. And the rate of growth in the measure excluding bonuses accelerated
from 1.9% to 2.2%, its strongest level since June 2011.
