U.K, Jobless Rate Down, EU Worker Numbers Rise

The unemployment rate in the U.K. fell to its lowest level in more than 40 years in June, while the number of European Union nationals working in Britain hit a record high.

The Office for National Statistics said Wednesday the unemployment rate in the U.K. declined to 4.4% in the three months through June, from 4.5% in the previous three-month period, marking the lowest rate of joblessness since spring 1975.

Figures show the labor market's strength still isn't feeding into robust wage growth, though, highlighting a conundrum that is testing central banks in many advanced economies. Wages in the U.K. rose in the three months through June at an annual 2.1%, excluding bonus payments, only marginally above the 2.0% growth recorded the previous three months.

The Bank of England has nevertheless said it believes interest rates in the U.K. will need to rise faster than investors expect to keep inflation in check. Annual inflation in Britain was 2.6% in July, well in excess of the BOE's 2% target. Economists predict the BOE will likely raise its benchmark interest rate early next year.

The number of people in work in the U.K. in June rose to 32.1 million, the highest level ever recorded, swelled by an increase in both U.K. citizens and foreign nationals finding jobs.

The number of EU workers in the U.K. rose in June to 2.4 million, reflecting a fall in unemployment among that group and a decline in those studying or otherwise outside the labor force.

The labor market data don't record whether the U.K. experienced an influx of new arrivals from the EU or elsewhere during the April to June period.

Controlling immigration from the EU is one of the central planks of the government's Brexit strategy. Employers' groups and recruiters say they are finding it increasingly difficult to recruit workers from the EU following last year's Brexit vote, given the fall in the pound and an accelerating eurozone economy.

Brexit talks between London and Brussels are set to resume later this month.

Write to Jason Douglas at jason.douglas@wsj.com and Wiktor Szary at Wiktor.Szary@wsj.com

(END) Dow Jones Newswires

August 16, 2017 05:12 ET (09:12 GMT)