U.K. Jobless Rate Falls To Lowest Since 2009

(RTTNews) - Unemployment rate in the U.K. declined to its lowest level in more than four years in the July-September period, raising prospects that the Bank of England may bring forward the timing of its future interest rate hike.

Data from the Office for National Statistics showed on Wednesday that the ILO unemployment rate fell to 7.6 percent in July-September from 7.7 percent in the three months through August. The figure was the lowest since February-April 2009. The number of unemployed was 2.47 million, the lowest in more than two years.

The fall in the unemployment rate "increases the likelihood that the Committee will predict a faster fall to the 7 percent threshold set out in its forward guidance than it expected in August's Report, potentially implying an earlier rise in interest rates," Jonathan Loynes, Chief European Economist at Capital Economics, said.

The Bank of England will publish its Inflation Report today. The central bank is widely expected to upgrade its growth projections and predict a faster fall in unemployment rate.

In August, the bank said that it does not intend to hike interest rates until the unemployment rate falls to 7 percent and the bank sees no possibility of unemployment falling to that level before the third quarter of 2016.

Data today showed that the claimant count for October fell by 41,700 from a month earlier to 1.31 million, the lowest level since January 2009. Economists had forecast a decline of 30,000. The claimant count rate fell to 3.9 percent from 4 percent in September.

The number of unemployed hit an all-time high of 29.95 million in July-September with the employment rate reaching 71.8 percent.

"This is a strong set of labor market data, indicating that unemployment is currently coming down pretty rapidly in reaction to the economy's markedly improved performance in recent months and much healthier business confidence," said Howard Archer, Chief UK and European Economist at IHS Global Insight.

ONS data also revealed that the total pay rose 0.7 percent year-on-year in July to September. Regular pay increased 0.8 percent over the same period, marking the the slowest growth on record.

The average earnings growth is showing little signs of moving up appreciably despite the strengthening labor market and this is maintaining a significant squeeze on consumers' purchasing power, Archer said.