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UK employment reaches record high of more than 32 million

The number of people in work in the UK reached a new record, according to official data, while wages grew in real terms for the second month in a row. But productivity dropped sharply.

There were 32.34m people in work in the three months to March - nearly 200,000 more than in the previous three months and 396,000 higher than a year earlier, according to the Office for National Statistics (ONS).

The UK’s employment rate – the proportion of people aged 16 to 64 years in work – was 75.6%, the highest since comparable records began in 1971. Unemployment fell 46,000 to 1.42m, giving an unemployment rate of 4.2%, the joint lowest since 1975.

Meanwhile, average weekly earnings increased by 2.9% excluding bonuses and by 2.6% including bonuses, compared to a year earlier. This is ahead of the latest Consumer Price Index inflation figure of 2.5%.

However, UK productivity fell during the first three months of 2018, dashing hopes of an improvement raised by strong growth in the second half of last year.

Output per hour worked fell by 0.5% in the first quarter, as hours worked grew without a matching rise in economic growth, according to the ONS.

“Workers will welcome the slight boost in wages…but the rise is nothing to write home about,” said Seamus Nevin, head of policy research at the Institute of Directors. “The only reliable way to boost workers’ pay packets is to increase productivity.”

Buy-to-let lending has fallen over the past year as tax rises and tougher mortgage rules squeeze landlords’ returns.

Lenders issued 5,500 buy-to-let mortgages for new purchases in March, 19% fewer than a year earlier, said banking group UK Finance.

Jackie Bennett, UK Finance director of mortgages, said: “The buy-to-let market remains subdued as tax and regulatory changes continue to have an impact on demand.”

In April 2016 the government imposed a 3% stamp duty surcharge on second homes. It has also reduced the tax relief that landlords can claim on mortgage costs.

UK Finance also reported little change in lending to first-time buyers over the past year. Some 31,200 new first-time buyer mortgages were completed in March,1.9% fewer than in March last year.

However, total lending to first-time buyers increased 2% to £5.1bn - meaning those buying their first homes have been borrowing more.

Remortgaging levels saw a sharp decline, with 34,200 remortgages in March, 12% fewer than in the same month last year.


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Important Notes:

Main source of information: Company Report and Accounts, Bloomberg

 

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