U.K. Q4 Unemployment Rate Falls; Total Pay Rises

(RTTNews) - The U.K. unemployment rate declined to the lowest in more than six years in the fourth quarter of 2014, while earnings increased more-than-expected and remained well above inflation.

The jobless rate fell to 5.7 percent during the October to December period, the Office for National Statistics said Wednesday. The rate was below 6 percent during the three months to September and economists' forecast of 5.8 percent.

Average earnings including bonus rose 2.1 percent in the three months to December, faster than an expected 1.7 percent growth. Total pay exceeded inflation by the biggest margin since 2008. Excluding bonuses, average earnings rose 1.7 percent.

Inflation eased to a record low 0.3 percent in January from 0.5 percent in December, on falling motor fuel and food prices. It is expected to turn negative in the months ahead.

A double dose of good news for the economy with earnings growth picking up in December helped by higher bonus payments and the labor market seeing healthy improvement, IHS Global Insight's Chief UK Economist Howard Archer said.

However, there is a risk that the low rates of inflation affect inflation expectations and pay growth, Vicky Redwood at Capital Economics said. But with labor market activity as strong as it is, this risk is likely to be low, the economist added.

During October to December, there were 1.86 million unemployed, down by 97,000 from September and 486,000 from a year ago. At the same time, employment rose by 103,000 from the prior quarter to 30.9 million in the fourth quarter.

The claimant count rate fell to 2.5 percent in January, as expected, from 2.6 percent in December.

The number of people claiming jobseeker's allowance decreased by 38,600 from December, while economists expected a decline of 25,000. From a year earlier, the claimant count fell by 383,500. The claimant count has fallen for 27 consecutive months.