Unemployment in the U.K. falls to 7-year low

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What's going on?

Unemployment in the U.K. has fallen to a 7-year low as rates of employment rose to their highest level. The unemployment rate fell to 5.6%, which is not far from the pre-economic crisis level of 5.3%. This is good news for the coalition government just weeks away from the British general election. The last time there was a British election unemployment was at 8%.

What does this mean?

The total number of people employed in the U.K. is around 31 million at 73.4% employed, the highest record since the 1970s. 75% of new jobs are full-time employee roles. That being said, people are earning around £1,600 less than in 2010. Bad productivity and slow wage growth are still issues the U.K. is facing despite the positive unemployment data, although the U.K. saw a wage increase during the past five months due to 0% inflation rates. Before the economic crisis, average wage increases were 4% annually, but they are now as low as 1.7%.

Why should I care?

While the unemployment rate hitting new lows is positive for any resident of the U.K., there is disagreement about whether this is a true sign of economic recovery since wage growth remains stagnant. Regardless, this is a good sign for the current government, which will use this data to assert claims of economic recovery as we approach the British election. One investment opportunity would be to see how the markets react to the unemployment data, which could provide a buying opportunity.
Originally posted as part of the Finimize daily email.


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