UK jobs market defies economy's Brexit slowdown

* Wage growth holds at strongest pace since 2008

* Job creation strong; unemployment lowest since 1975

* Honda, Nissan moves raise Brexit-linked concerns

* Productivity falls in late 2018

* EU workers in UK fall, non-EU workers rise

(Adds details, comment from economists)

By William Schomberg and David Milliken

LONDON, Feb 19 (Reuters) - British workers' pay growth

maintained its fastest pace in a decade in late 2018 and job

creation stayed strong, data showed, suggesting the labour

market was buoyant ahead of Brexit as the broader economy

slowed.

Total (LSE: 524773.L - news) earnings, including bonuses, rose by an annual 3.4

percent in the three months to December, matching their fastest

pace of growth since mid-2008.

The increase was a touch below a forecast for a pick-up to

3.5 percent in a Reuters poll of economists.

Average weekly earnings excluding bonuses also rose by 3.4

percent on the year, the Office for National Statistics said on

Tuesday, in line with the poll forecast.

Britain's strong labour market has defied a slowdown in the

economy since the 2016 referendum vote to leave the European

Union.

Tuesday's figures showed the number of people in work rose

by 167,000 in the three months to December, the biggest increase

since the first quarter of 2018 and stronger than the poll's

forecast of 140,000.

With Britain due to leave the EU in just over a month's

time, and no clarity yet on whether it will get a deal to smooth

the shock, many companies have cut investment in equipment,

potentially making them more likely to hire workers.

BREXIT EFFECT AHEAD?

However, Honda's announcement that it will close a plant

with the loss of 3,500 jobs and Nissan's decision not to build a

new model of car in Britain have raised concerns about the

outlook for big manufacturers against the backdrop of Brexit and

a slowing world economy.

Signs of nervousness among businesses might be yet to appear

in the jobs figures, Andrew Wishart, an economist with

consultancy Capital Economics, said.

"The (business) surveys deteriorated more markedly in

January, so a Brexit effect might start to weaken employment

growth in the next batch of official data."

With (Other OTC: WWTH - news) unemployment at its lowest rate since 1975 - 4.0

percent in the three months to December - employers have begun

raising pay for staff more quickly.

The Chartered Institute of Personnel and Development, a

human resources professional body, said on Monday that

private-sector employers planned to increase basic pay rates

this year by the most since the survey started in 2012.

The Bank of England has said it will need to raise interest

rates gradually to offset inflation pressures from rising pay.

This month, it forecast wage growth would slow to 3.0

percent by the end of 2019 before picking up again.

When adjusted for inflation, total earnings in the last

three months of 2018 rose by 1.3 percent, the fastest increase

since late 2016, the ONS said.

However, the pace of nominal wage rises remains slower than

the 4 percent increases of before the financial crisis.

PRODUCTIVITY PROBLEM

Tuesday's ONS data showed a downside of the continued strong

job creation in the form of a latest fall in productivity, the

Achilles' heel of Britain's economy.

Output per hour fell 0.2 percent in annual terms in the last

three months of December. The last time it declined by more was

in late 2015, the ONS said.

Weak productivity puts long-term pay growth in jeopardy and

risks pushing up inflation.

The ONS data showed a fall in the number of EU workers in

the United Kingdom, largely driven by a decline in eastern

European workers. But the number of non-EU workers rose,

resulting in a total annual increase of 83,000 foreign workers

in the country in the last three months of the year.

(Writing by William Schomberg; editing by John Stonestreet)