Men are seen pressing clothes at the Fashion Enter factory in London in this file photo.EDDIE KEOGH/Reuters
Britain's job market has begun to show signs of softening after months of appearing resilient to the country's decision to leave the European Union last June.
Figures released Wednesday showed the number of people employed between August and October fell by 6,000 from the previous three months to 31.7 million. That was the first decline since the second quarter of 2015.
On a monthly basis, the total fell by 38,000 last month. The unemployment rate remained steady at 4.8 per cent for the three-month period but it rose to 4.9 per cent for the month of October.
"The labour market appears to have flattened off in recent months," said David Freeman, senior statistician at the Office for National Statistics. "While the employment rate remains high, it is slightly down on the record set recently. Meanwhile a small fall in [the number of unemployed] on the quarter was more than offset by a rise in economic inactivity."
Economists had been marvelling at the relative strength of the British economy given the concerns that had been raised about Brexit before the referendum in June.
But Wednesday's figures indicated the economy is beginning to feel the impact.
"This is the first genuine disappointment we have seen in the hard data since the Brexit vote," said Alan Clarke, head of European fixed income strategy at Scotiabank in London. "Ordinarily, I wouldn't overreact to a negative employment number, especially if it followed a really strong number and represented payback. But this has been a gradual deterioration."
He noted that employment growth has slowed from 2 per cent year over year to 1 per cent. Meanwhile inflation has risen to 1 per cent, cutting the growth in real disposable incomes in half to 2 per cent. "This is bad news for spending growth next year. So we are relying on overseas tourists (the kindness of strangers some would say) coming here spending their money [and] the return of the stay-cation to prop up growth."
James Knightley, senior economist at ING, said the job numbers come amid reports that businesses were already pulling back on investing and hiring because of the uncertainty over Brexit. "The U.K. has experienced a rapid deterioration in job creation, giving the sense that Brexit uncertainty is now becoming a drag on the economy," he said in a report Wednesday. "Today's report suggests that firms are now actually pulling back given the U.K. was creating over 170,000 jobs during the summer."
Paul Waldie