UK wages are now growing at their fastest rate since 2009
REUTERS/Christopher FurlongUK Chancellor George Osborne visits a factory.
The UK just released labour market data for July, revealing that the unemployment rate fell unexpectedly.
The unemployment rate came in at 5.5%, the lowest since 2008.
Wages, excluding bonuses, rose by 2.9%, the largest increase since 2009.
Analysts were expecting wages excluding bonuses to rise by 2.9% year-on-year, and for the unemployment rate to stay static at 5.6%.
It certainly looks like something different is now happening in the UK labour market, following two years of pretty rapid declines in unemployment, and a strengthening employment rate.
In fact, in the second quarter of the year, the UK employment rate shrank, giving it one of the worst performances in the European Union:
Eurostat
That could be a sign that the UK's reaching roughly full employment, and would also go some way to explaining the stronger wage growth we've been seeing too.
The UK employment rate is already looking very strong at 73.5%, a historical high. At those levels and with solid economic growth, a small dip isn't anything to worry about. In fact, with fewer people moving from unemployment to employment, there's significantly more competition among employers, all looking for staff.
And that generally means they'll have to compete more on price — raising the wages they're paying their workers.
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