UK job creation slows and wage increase dented by inflation- ONS

Official employment figures have revealed a slowdown in job creation and impact on average wage increases.

The data - from the Office for National Statistics (ONS) - was being closely watched for evidence of a post-Brexit vote impact but the body said a "small" increase of 10,000 in unemployment was down to more people looking for work.

It released the figures just 24 hours after charting a big increase in the cost of living, with inflation standing at an annual rate of 1% from 0.6% in August.

The pace of consumer price increases was adding pressure to household budgets but the ONS said on Wednesday that average earnings, excluding bonuses, were rising at an annual rate of 2.3%.

While it marked a rise from 2.1% the previous month the ONS added that, in real terms - measuring regular pay against inflation - earnings were rising at their slowest pace since 2015.

Economists see inflation outstripping wage rises later next year as price rises, partly caused by the 18% drop in the value of the pound since the referendum, filter through - putting a squeeze on consumer spending power.

A separate study of households by financial data firm Markit, also released on Wednesday, suggested sentiment was already being knocked by fears of a spike in living costs.

:: Don't blame Brexit for inflation rise... yet

The ONS said the number of people in work jumped by 106,000 in the three months to August, down from figures of more than 170,000 over the previous three reporting periods. The jobless rate remained at 4.9%.

ONS statistician Nick Palmer said: "These figures show that employment continued to grow over the summer and vacancies remain at high levels, suggesting continuing confidence in the economy.

"While there was also a small rise in the headline unemployment level, that was accompanied by more people actively seeking work.

"The headline Labour Force Survey and earnings data are for June to August, so cover two months after the result of the EU referendum became known."

The data helped push the pound back above $1.23 and €1.12 during Wednesday's trading.

Sterling has suffered in recent weeks over investor fears of a so-called 'hard' Brexit but investors have taken some heart from signs that parliament will get a vote on the terms of the UK's EU exit deal.

Naeem Aslam, chief market analyst at ThinkMarkets, said: "The UK's economic data released today has confirmed that the labour market is not showing any sign of weakness - at least not for now.

"This has supported the currency which is trading sharply higher."