Britain’s buoyant jobs market brushed off the Brexit vote in August to maintain its record employment rate of 74.5%, the same as the previous quarter, to take the total number of people with a job to just below 32 million.

But analysts said that more than half the 106,000 rise in employment was among part-time workers, reversing a boom in full-time jobs in 2015 and most of this year.

A rise in wages, excluding bonuses, to 2.3%, from 2.1% in July, was also played down by business groups, which warned that workers were likely to come under pressure from rising inflation eating into their disposable incomes.



The Confederation of British Industry said pay growth remained lacklustre and was under pressure from an inflation rate that hit 1% in September and could rise above 2% next year.

The CBI urged ministers to focus their efforts on supporting industry to raise productivity and increase wages, to offset the effects of rising prices.

As the debate hots up over the form Britain’s exit from the EU will take, the squeeze on incomes and slowing jobs growth is expected to put the Treasury on the back foot.

The strong labour market, which employs more people than at any time since records began in 1971, is considered one of the government’s main achievements. A permanent decline in jobs growth would put pressure on the chancellor, Philip Hammond, to introduce more incentives in next month’s autumn statement.

The employment minister, Damian Hinds, said the jobs market remained robust after recording a high number of vacancies, rising wages and another month of jobs growth.

“It’s great news for Britain, as the employment rate remains at a record high with more than 31.8 million men and women in work,” he said.

The British Chambers of Commerce said the rise in employment was welcome, before warning against complacency after recent surveys of employers showed that businesses had scaled back investment and new hiring.

Mike Spicer, the BCC’s director of economics, said it was also important to note that there was the first rise in unemployment for a while and that the rise in employment was smaller than it had been in recent quarters.

“The post-referendum labour-market picture is unlikely to fully emerge for some time, but our own survey data suggests that businesses have lowered their expectations over hiring more staff, and investing,” he said.



Echoing the CBI’s message, Spicer added: “Next month’s autumn statement is a great chance for the government to pull out all the stops to support business confidence – and firms will repay that backing with investment, hiring, training and export growth.”



Figures from the Office for National Statistics showed the unemployment rate was steady at 4.9%, its lowest since 2005, and jobs vacancies showed no sign of disappearing after the number stayed at 750,000 from July.

But employment growth slowed from the 173,000 rise in the three months to July to 106,000 in August.

A rise in the number of people unemployed also indicated that employers were becoming wary of holding on to staff in the more uncertain period following the Brexit vote.

A total of 24,000 joined the unemployment register in August from July, compared with a previous quarter-on-quarter rise of 10,000.

David Blanchflower, a former member of the Bank of England’s interest-rate-setting committee, said the rise in unemployment showed cracks were appearing in the labour market data.

He said the rise in wages had also failed to push take home pay above its pre-crash peak once inflation was taken into account. Real total pay of £364 a week was still 7.7% below the level seen in February 2007, when it stood at £386, said Blanchflower.

Chris Williamson, chief business economist at IHS Global Insight, struck a similar tone, saying: “[Business] surveys have also indicated a waning in the hiring trend, and suggest that we’re likely to see a more severe weakening of the official labour market data in coming months.

“The REC recruitment industry survey shows the number of people placed in permanent jobs by agencies has slowed markedly in recent months, down to levels that are consistent with unemployment rising, albeit rebounding somewhat in September from the low seen in July.

“Similarly, PMI [purchasing managers’ index] survey data indicate that employment growth remains stunted compared with earlier in the year, amid widespread anxiety about committing to new hires, given the uncertain political and economic outlook,” he said.