LONDON--U.K. unemployment fell in February below a threshold set
by the Bank of England, official data showed Wednesday, a fall that
will prompt officials to reassess their interest-rate stance next
month.
The Office for National Statistics said the jobless rate in
Britain averaged 6.9% between December and February, down from 7.1%
during the previous three months. That is the lowest jobless rate
since February 2009.
The decline takes the unemployment rate below a threshold set by
the Bank of England in August. Officials pledged then not to
consider a rise in interest rates until joblessness reached 7%.
The decline is unlikely to make the BOE alter course. BOE Gov.
Mark Carney in March said policy makers have started looking at a
broader range of labor market and other economic indicators to
gauge how much slack there is in the U.K. economy and to judge when
to raise rates. With inflation subdued, economists expect the BOE
to keep its benchmark interest rate at a low of 0.5% until early
next year.
Wednesday's data also show a long squeeze on Britons' earnings
appears to be nearing an end. Rising prices have outstripped
increases in the average Briton's paycheck for more than half a
decade, hurting households' spending power and crimping
consumption.
Now wage growth looks set to overtake inflation. The ONS said
Wednesday that average weekly earnings, including bonus payments,
grew 1.7% in the three months to February, compared with the same
period a year earlier, up from 1.4% growth in the previous three
months. Annual inflation was 1.7% in February and slowed further,
to 1.6%, in March.
Write to Jason Douglas at jason.douglas@wsj.com and Ilona
Billington at ilona.billington@wsj.com.
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