At first glance the UK labour market is in rude health. In the first full post-Brexit report from the Office for National Statistics unemployment fell to just 4.8%, an 11 year low.
For the period July - September 2016, 31.8 million people were in work (an all-time record) with employment rates at 74.5%.
Despite these unexpected results there are signs that all might not be well under the surface. The rate of employment growth has slowed down, the number of people claiming unemployment benefits has risen at the fastest pace since May this year and many, including the Bank of England, predict that inflation will soon outstrip pay growth.
The British Chambers of Commerce said Brexit was “dampening firms' recruitment intentions" and that this would put "increased pressure on UK employment levels".
The Labour Market Outlook report, published by the Chartered Institute for Personnel and Development (CIPD) and Adecco Group UK&I suggests that companies only believe that pay will increase by 1.1% in the coming 12 months, whilst the Bank of England believes inflation will hit 3%. This would have a significant impact on real wages.
Trade Unions Congress (TUC) general secretary Frances O'Grady said: "Real pay growth is the slowest it's been since early 2015. Wages are not growing fast enough to withstand the rise in inflation expected next year.
It is worth noting that these are only predictions and signs currently, especially given that all predictions until this point suggested that the labour market would suffer significantly following a vote to leave the UK. Even youth unemployment is at the lowest level for 15 years!
Alex Fleming, Managing Director of Adecco Retail says:
“The UK labour market continues to demonstrate that employers are confident about the future. There may be some signs of a slowdown but that doesn’t have to mean alarm bells – employers can take advantage of this and recruit for the hard-to-find skills.”