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Wednesday, 14 June, 2000, 10:08 GMT 11:08 UK
Wages growth slows

The rate of increase of wages in the UK has come down sharply, easing fears that it is stoking up inflation.

Average earnings rose by 5.1% in the three months to April, down from 5.7% in the previous period, and below analysts' expectations.

Excluding bonuses, average earnings rose by just 4.4%.

The slow-down was the biggest since March 1993.

ILO regional unemployment (Feb-April)
North East 8.5%
North West 5.9%
Yorkshire 6.3%
East Midlands 5.0%
West Midlands 6.1%
East 3.8%
London 7.4%
South East 3.5%
South West 4.3%
Wales 6.5%
Scotland 7.6%
N Ireland 7.0%

The number of people out of work and claiming benefit was also down by 8,600 to 1,109,000 in May, an unemployment rate of 3.9%, a 20-year low.

But the fall was less than expected, after a drop of more than 20,000 last month.

Regional differences

The broader measure of unemployment, ILO unemployment, also fell by 60,000 in the three months to April to 1.681m, giving an unemployment rate of 5.7%.

Unemployment fell or was stable in all regions except Northern Ireland, which showed a slight rise.

But the rate in the worst-hit region, the North East, is still more than double that in the South East, where unemployment is at its lowest.

Employment Minister Tessa Jowell said that the figures showed that half a million fewer people were claiming unemployment benefit than at the time of the last General Election in May 1997.

"This is a reflection of two things: the strong, stable economic framework which gives businesses the confidence to invest and the success of government programmes to tackle long-term unemployment," she said.

Rate fears eased

There had been fears that with unemployment so low, wages would continue to rise, putting pressure on the Bank of England to raise interest rates further.

The Bank has previously said that wage growth of around 4.5% or less was needed to keep inflation in check.

"Certainly they are a lot softer than people were going for and it's going to make it very difficult now ... for the Bank to justify a rate hike next month." said Jeremy Hawkins of the Bank of America.

The Bank of England has kept interest rates unchanged at 6.0% for the last four months.

It meets again at the beginning of July.

More in work

The number of people in work in the UK continues to climb, with 27.87m people in the workforce.

That is an increase of 324,000 from the previous year.

There are 7.6m people of working age who are not economically active, of whom 5.3m are not interested in seeking a job, while 2.1m did want a job but were not actively seeking one.

But within the total, male manufacturing jobs continue to decline.

There were just under 4m jobs in manufacturing, down 100,000 from one year ago.

Total male full-time employment was 14m, while 7m women were in full-time work. Of the 7m part-time workers in the economy, 5.5m are women.

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See also:

17 May 00 | Business
Unemployment reaches 20-year low
07 Jun 00 | Business
UK rates remain stable
13 Jun 00 | Business
Inflation creeps higher
13 Jun 00 | UK Politics
Tories aim at 'full employment'
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