Real earnings fell again in October as unemployment stayed flat

The squeeze on consumers was confirmed today after official data showed wages rose 2.5 per cent in the year to October, half a percentage point below inflation.

The figures, by the Office for National Statistics, showed real wages, which are adjusted for inflation, fell 0.2 per cent including bonuses, and 0.4 per cent when bonuses are stripped out.

The news comes after official data yesterday showed inflation had climbed to 3.1 per cent in November, its highest since March 2012.

The pound rose against the dollar as the data also showed unemployment in the UK remained flat at 4.3 per cent in the three months to October, against expectations of a fall to 4.2 per cent. However, the number of people in work fell by 56,000 in the three months to October, the biggest quarterly fall since 2015.

Sterling climbed 0.2 per cent to $1.3343 on the news.

Read more: Four in 10 private sector employers are under no pressure to raise wages

However, the claimant count – the number of people claiming unemployment benefits – missed expectations, rising by 5,900 to 817,500, down from last month’s climb of 6,500 but above forecasts of 3,200.

“Employment stayed close to its record high and while up on a year ago, declined compared with the previous three months,” said Matt Hughes, senior statistician at the ONS.

“Unemployment also fell, but there was a rise in the number of people who were neither working nor looking for a job. Meanwhile the number of vacancies continues to grow, reaching a new record high.”

“Perhaps, the Brexit effects are becoming more prominent,” added Naeem Aslam, chief market analyst at Think Markets UK.

“Very little improvement in the average earning index has failed to produce any explosive move for sterling which was trading higher ahead of the news.”

Read more: Brexit and inflation set to push UK wages down in 2018