UK Unemployment Rate Falls To Lowest Since 1975

U.K. unemployment fell in the three months through May to an over four-decade low, data showed Wednesday, but wages adjusted for inflation fell for the third consecutive month, signaling Britons were facing a living standards squeeze despite a robust labor market.

The decline in real wages is a worrying sign for the U.K. economy, which relies heavily on consumer spending for growth. Economic growth had already slowed sharply in the first quarter of the year as accelerating inflation prompted U.K. shoppers to rein in spending.

The unemployment rate fell to 4.5% in the March-May period, the lowest since 1975, with the numbers of unemployed workers dropping by 64,000, the Office for National Statistics said, and the number of people in work hitting an all-time high.

Britons' real wages, however, fell by 0.5% in the three months through May, data also showed, as consumer prices grew at a faster rate than earnings. Inflation stood at 2.9% in May, the fastest pace of price growth in nearly four years.

The concerns about economic growth come as Britain begins complex exit negotiations with the European Union, due to conclude in March 2019.

-Write to Wiktor Szary at Wiktor.Szary@wsj.com and Toby Luckhurst at Toby.Luckhurst@wsj.com

(MORE TO FOLLOW) Dow Jones Newswires

July 12, 2017 04:50 ET (08:50 GMT)