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Sterling drops after yesterdays gains

Britain’s unemployment rate unexpectedly fell further to its lowest since 1975 during the three months to July, but wage growth proved even more subdued than expected, official figures showed this morning.

The data are likely to deepen division at the Bank of England over whether the time for an interest rate rise is nearing and will increase pressure on Prime Minister Theresa May’s government to further loosen the cap on public-sector pay.

The number of people in work rose to a record high of 32.136 million as 181,000 people gained jobs, the strongest increase since late 2015 and belying other signs of sluggish economic growth this year after last year’s Brexit vote.

The rapid job creation took the unemployment rate down to 4.3 percent from 4.4 percent.

Wages in the three months to July were 2.1 percent higher than a year earlier, little changed from previous months’ growth rates. Economists polled had on average forecast a rise of 2.3 percent.

With inflation hitting its joint highest level in more than five years of 2.9 percent in August, wages are failing to keep up with inflation. In real terms, wages dropped 0.4 percent in the three months to July.

The figures are likely to complicate Bank of England policymakers’ debate over whether to support a rate rise at their monthly Monetary Policy Committee meeting later on today. The outcome of the meeting is due to be announced on Thursday.

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