UK unemployment at 11-year low

UK unemployment has fallen to its lowest level since July 2005, according to a new report from the Office for National Statistics (ONS) which covers the period before the UK voted to leave the European Union.

The ONS said on Wednesday that the unemployment rate in March to May 2016 was 4.9%, down from 5.6% a year earlier. The last time it was lower was in July to September 2005.

Meanwhile the employment rate (the proportion of people aged 16-64 who were in work) stood at 74.4%, the highest since comparable records began in 1971.

However, analysts warned that the positive trend may turn around following the June referendum.

?The vote to leave the EU will almost certainly now cause some firms to put hiring decisions on hold or cut back headcounts altogether,? said Paul Hollingsworth, UK economist at Capital Economics, as quoted by BBC News.

?Indeed, we expect the unemployment rate to begin to drift up over the coming quarters. The upshot is that these may be the best set of labour market figures for a while.?

The Bank of England?s monthly summary of business conditions, which was also released on Wednesday, highlighted the prospect of some firms cutting back on staff recruitment over the coming year.

It said that business uncertainty had ?risen markedly? since the EU referendum.

?A majority of firms spoken with did not expect a near-term impact from the result on their investment or staff hiring plans,? the Bank noted.

?But around a third of contacts thought there would be some negative impact on those plans over the next 12 months.?

The ONS report also showed a continued rise in wages for March to May 2016, with pay including bonuses up 2.3% compared with a year earlier ? the biggest increase since October 2015.

But further wage growth could be held back if unemployment starts to creep back up, according to Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

?Rising unemployment and falling job vacancies [are likely to] ensure that wage growth does not respond fully to the looming pick-up in inflation,? he said.