Jobless rates in Suffolk and Essex resilient but real incomes come under further pressure

The pay squeeze on British households has intensified despite a new record level of employment.

The pay squeeze on British households has intensified despite a new record level of employment. Picture: Philip Toscano/PA Wire - Credit: PA

The pay squeeze on British households has tightened further, despite employment increasing to a new record high, according to official figures.

Average earnings grew by 1.8% in the year to May, figures from the Office for National Statistics (ONS) show, down from 2.1% the previous month and well below the 2.9% rate of inflation for May – the highest for nearly four years.

However, the number of people in work climbed to around 32m, an increase of 324,000 compared with a year earlier and the highest total since records began in 1971.

Total unemployment fell by 64,000 to 1.49m in the three months to May, the lowest level since 2005, although the narrower count of those eligible to claim unemployment-related benefits grew on a seasonally-adjusted basis by 6,000 last month to 829,000.

Before seasonal adjustment, however, the claimant count fell by around 10,000 and most parts of Suffolk and north Essex followed this trend.

In Suffolk, local jobless rates fell by 0.1 of a percentage point in Ipswich, where the count fell by 80 to 1,745 (a rate of 2.0%), St Edmundsbury, down 15 to 775 (1.1%), and Forest Heath, down 10 to 330 (0.8%).

Rates were unchanged elsewhere, including Babergh, down 25 to 405 (0.8%), Mid Suffolk, down 35 to 455 (also 0.8%), Suffolk Coastal, down 15 to 475 (0.7%), and Waveney, down five to 2,375 (3.6%).

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In north and mid Essex, the jobless rate in Tendring fell by 0.1, with the count down by 45 at 2,095 (2.7%) while smaller falls left rates unchanged in Colchester, down 35 to 1,375 (1.2%), Maldon, down 10 to 360 (1.0%), and Uttlesford, down 10 to 245 (0.5%).

And, despite small increases in the count, rates were also unchanged in Braintree, up 10 to 1,010 (1.1%), and Chelmsford, up 20 to 1,230 (also 1.1%)

Soaring inflation triggered by the Brexit-hit pound has put household spending power under sustained pressure since the start of the year, causing disposable incomes to fall and the amount spent on credit cards to increase.

The rate at which people are setting aside money for savings has also sunk to record lows, suggesting consumers are raiding their nest eggs in order to keep spending.

Howard Archer, EY ITEM Club’s chief economic adviser, said the “anaemic” earnings growth would give Bank of England policymakers a reason for holding back on an interest rate rise.”

He said: “Worryingly for consumers, higher employment is still not translating into higher pay as inflation ratchets up further.

“Thus the squeeze on consumers continues to intensify, with obvious negative implications for personal expenditure.

“Anaemic earnings growth is a key factor arguing against any near-term Bank of England interest rate hike, and the latest data keep this argument firmly in place, along with recent largely disappointing UK economic developments.”

TUC general secretary Frances O’Grady said the onus was now on the Government to take action to boost wages across the UK.

She said: “Three months of falling pay is three months too many. The clock is ticking whilst workers wait for the Government to act.

“Ministers must set out a plan to get real wages rising across the public and the private sectors. They should start by scrapping the unfair pay restrictions on nurses, midwives and other public sector workers, and the minimum wage must be raised to £10 as quickly as possible.”