Lowest jobless tally since 1974 adds rate pressure on Bank of England

Jobless at lowest since mid-seventies (Rui Vieira/PA)

(Picture: PA Archive)

Unemployment has fallen to its lowest level in nearly half a century as employers continue to struggle to recruit the staff they need to grow their businesses.

The jobless tally dropped from 3.6% to 3.5% in the three months to August, a rate not seen since early 1974, according to the Office for National Statistics (ONS).

It means that just 1.188 million people were actively looking for work, not enough to fill the 1.246 million recorded vacancies in the July to September quarter.

In London unemployment fell to 201,000 or just 4%, the lowest rate since detailed records began in 1992. The jobless total in London has fallen faster than any other region of the country.

The impact of Brexit and a huge rise in long term sickness since Covid has left much of the economy facing huge labour shortages that has held back the economic recovery.

The tight labour market will put more pressure on the Bank of England to order a huge rise in interest rates at its next meeting early next month.

Chancellor Kwasi Kwarteng said of today’s data: “Countries around the world are facing economic challenges, but today’s statistics remind us that the fundamentals of the UK economy remain resilient, with unemployment at its lowest point for almost 50 years.

“Our ambitious growth plan will drive sustainable long term growth, meaning higher wages and better living standards for everyone, and we are cutting taxes so people can keep more of what they earn.”

However, there were also tentative signs that the long fall in unemployment may soon be coming to an end. Vacancies fell 46,000, the third consecutive monthly decline, but are still 450,000 above pre-covid levels

Tania Goodman, partner and head of employment at City law firm Collyer Bristow, said: “Job vacancies remain at a historical high suggesting the labour market, which some had predicted might be deflating, remains buoyant. However, the long-term nature of these vacancies suggests bigger problems within the labour market, due to many industries and supply chains experiencing a critical shortage of workers.

“This is not helped by the level of long-term sickness absence, including long-covid, and with infection rates reportedly increasing, we may see economic inactivity levels increase further over the winter period.”

Ben Harrison, director of the Work Foundation think tank at Lancaster University, said: “The Government is right to focus on driving growth in the economy, but it cannot do so without tackling the UK’s participation issue.

“If the Prime Minister is to be true to her word on ‘taking tough decisions’, her administration should drop the rhetoric on benefit claimants needing to work harder and instead focus the full power of Government to support those who have dropped out of the labour market, including those not receiving Universal Credit.”