In response to today’s UK labour market figures, John Hawksworth, chief economist at PwC, commented:
“The great UK jobs creating machine has kicked into gear again, with employment growth accelerating in recent months after slower growth in late 2016. The employment rate is now within touching distance of 75% for the first time ever, while the unemployment rate fell further to 4.5%.
“In the 1970s or 1980s such low unemployment, combined with inflation rising towards 3%, could have set off a wage-price spiral. But the Phillips curve now appears remarkably flat, with regular pay growth still subdued at 2% despite some pick-up from last month. Including bonuses, average earnings growth actually fell back to 1.8%.
“As a consequence, real earnings growth remains deep in negative territory and this seems unlikely to change anytime soon. This will dampen consumer spending power, though the continued strength of the jobs market should prevent the recent slowdown in the economy turning into a recession.”
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