U.K.'s Consumer Squeeze Continues Despite Tight Labor Market

Britons' wages adjusted for inflation shrunk again in the three months through November despite a tightening labor market, as the consumer squeeze evident since the Brexit vote shows no signs of letting up.

The U.K.'s employment level reached a new record high in the September to November period, figures published Wednesday by the Office for National Statistics showed, with the unemployment rate remaining at the four-decade low of 4.3%. The unemployment rate was in line with expectations of economists polled by The Wall Street Journal.

The number of job openings in the economy also increased, hitting a record high as the number of people neither in work nor seeking employment dropped to its lowest in over 15 years, government statisticians said.

However, the red-hot labor market has so far failed to lift Britons' wages above the level of consumer-price growth, which has accelerated sharply since the 2016 Brexit-linked depreciation of the pound.

British workers' nominal wages excluding bonuses rose by 2.4% in the September to November period, slightly above market expectations. However, real wages dropped by 0.5%, marking the ninth consecutive period of above-target inflation eroding consumers' spending power.

Inflation eased slightly in December to 3% on year, but remained significantly above the Bank of England's 2% goal.

The continued slump in real wages spells trouble for the U.K. economy, which relies heavily on domestic demand, and has already slowed in the first three quarters of 2017.

Data on economic growth in the final three months of the year are due to be published by the ONS on Friday.

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

(END) Dow Jones Newswires

January 24, 2018 04:51 ET (09:51 GMT)