With the economy barely growing over the past few months, the Office for National Statistics says the labor market is now reflecting that slowdown. It said the number of people in work dropped by 56,000 in the three months to August from the previous three-month period, to 32.69 million. That's the biggest decline since the spring of 2015.
The number of people unemployed rose by 22,000 during the period to 1.31 million, lifting the jobless rate to 3.9% from 3.8%. Job vacancies were at their lowest for nearly two years. In another sign of weakness, annual earnings growth including bonuses slowed to 3.8% in the three months to August, from the 3.9% recorded in July.
"The Brexit-related slump in corporate confidence finally has taken its toll on the labor market," said Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics. Since Britain voted to leave the EU in June 2016, the labor market has been strong as firms have opted to cut investment rather than staff. However, a decline in confidence in the past few months as the country grapples with Brexit seems to be taking its toll.
Some of the uncertainty could be lifted in coming days if Prime Minister Boris Johnson secures a Brexit withdrawal agreement with the EU. Should lawmakers back a deal, Britain could finally leave the EU by the scheduled Brexit data at the end of this month or slightly later.
Though the long-term trading relationship with the EU would still need to be negotiated, a near-term Brexit deal would mean Britain avoids a chaotic exit involving the imposition of tariffs and other impediments to trade with the EU, a scenario most economists think would lead to recession.
In its half-yearly World Economic Outlook, the International Monetary Fund predicted that the British economy would see growth pick up next year if a Brexit deal is agreed upon. It predicted that the British economy would grow 1.2% this year and 1.4% next, unchanged from its April forecasts and ahead of its forecasts for France and Germany. The IMF's forecasts are based on an orderly Brexit from the EU.
Many British lawmakers are looking to stop Brexit altogether and hope to muster enough votes to call for another referendum on EU membership.