UK Unemployment Rate At Four-Decade Low, But Real Wages Fall

The U.K. unemployment rate fell to an over four-decade low in the first quarter of the year, but regular wages adjusted for inflation declined for the first time since 2014, data showed, a sign Britons are facing a living standards squeeze despite the robust labor market.

The figures highlight a potential drag on the U.K.'s economic growth just as Prime Minister Theresa May, who in March launched divorce talks with the European Union, heads into a general election, aimed at strengthening her hand in the negotiations.

Polls are suggesting she is likely to increase her parliamentary majority, but the squeeze on Britons' wallets could potentially play into the hands of the main opposition left-wing Labour Party.

Led by Jeremy Corbyn, the party has sought to shift the debate away from Brexit, focusing on living standards instead.

Unemployment rate in the January-March period fell by 0.2 percentage point on the previous quarter, to 4.6%, the lowest since mid-1975, as employment rose by 122,000, hitting the highest level on record, the Office for National Statistics said Wednesday.

But adjusted for inflation, regular wages in the first quarter fell by 0.2%, the first decline in real wages since 2014.

Annual inflation in the U.K. stood at 2.7% in April, the fastest rate of price growth in over three years, overshooting the Bank of England's 2% target for the third consecutive month.

Preliminary data showed that the U.K.'s economy slowed sharply already in the first quarter of the year as consumers pared back spending.

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

(END) Dow Jones Newswires

May 17, 2017 04:57 ET (08:57 GMT)