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Fresh jobs data in the U.K. managed to surprise market analysts on Wednesday, with benefit claimant figures actually falling following the country’s decision to leave the European Union.
The data for July – and hence an indicator of post-Brexit sentiment – showed that the number of people claiming out of work benefits fell 8,600, at 2.2 percent of the workforce. Economists had expected the number of benefit claimants to rise by 9,500 following the result to leave the EU, Reuters reported.
The lowest number of people claiming unemployment related benefits was 422,600 in December 1973, according to the ONS, and the highest figure was 3.09 million in July 1986. For the latest month, July 2016, there were 763,600 people claiming unemployment related benefits.
Unemployment rate steady
Meanwhile, unemployment in the U.K. remained unchanged in the three months to June, marking the last employment measurement before the U.K.’s decision to leave the European Union (EU) on June 23.
Unemployment remained at 4.9 percent in the three months to June, the U.K.’s statistics agency, the Office for National Statistics, said on Wednesday. Breaking down the data, U.K. unemployment fell by 52,000 to 1.64 million in the May-June period. In the same period, average weekly earnings rose 2.4 percent, meeting estimates.
Sterling rose to 86.35 pence per euro following the data, having traded at 86.47 before the data was released.
For Apr-Jun 2016 wages up 2.4% on a year earlier including bonuses, & 2.3% excluding bonuses http://ow.ly/Qx38303jl1x
Neil Wilson, markets analyst at ETX Capital, warned that the employment data masked a “ticking time bomb” in the jobs markets, however.
“While the employment rate hit a record high, the figures are for the April to June period and don’t really take into account the effect of the EU referendum. We shouldn’t read too much into the marginal fall in people claiming unemployment benefit in July. Higher self-employment numbers could mean people are not getting enough hours and indeed average working times fell,” he said in a note.
“Employment is a lagging indicator so we’ll have to wait for the report in three months’ time to really judge what has happened.”
In the coming months, analysts will continue to watch the unemployment level as one of the key indicators of how the Brexit vote is affecting the U.K. economy. Whether the vote to leave the EU has impacted employer confidence and hiring prospects largely remains to be seen, however, with next month’s figures expected to give a better idea of how employers feel about the vote.
Britain has yet to formally begin the EU exit process and even when it does trigger “Article 50” negotiations over the country’s future relationship with the EU are expected to take years, leaving businesses in a state of uncertainty