UK Living Standards Perk Up in November, Unemployment Drops

        By Jon Sindreu and Nicholas Winning
        LONDON--Economic conditions for British workers continued to improve in November, as low inflation kept boosting living standards and the jobless rate fell below 6% for the first time in more than six years.
        Average weekly earnings--excluding bonuses--rose 1.8% in the three months to November, the Office for National Statistics said Wednesday, the fastest increase since September 2012.
        The climb in salaries joins a fall in the cost of living. The tumbling price of oil in the international markets has dragged inflation to record-lows--the headline rate was 0.5% in December, the lowest in a decade, the ONS said. This has allowed Britons to leave behind a five-year-long squeeze on their living standards: November was the third month in a row in which salaries outpaced inflation, according to official figures.
        The economy and the cost of living are key battle grounds for the British general election in May.
        Although central banks across the world are grappling with subdued prices, economists say low inflation is actually a boon for the British economy. Usually, policymakers fear weak across-the-board prices because they drive households to spend less, waiting for products to get cheaper. However, analysts point out the fall in prices in the U.K. is due to cheaper oil and not weaker demand, which means consumers and businesses are set to feel richer and ramp up spending instead.
        Unemployment in the U.K. also continued to drop between September and November. The jobless rate was 5.8%, the ONS said, the lowest since August 2008. More forward-looking official figures for December showed benefit claimants continued to fall as well.
        The labor market in Britain experienced a fast improvement throughout 2014, as the economic recovery took hold, but employment gains slowed as the year came to a close. In fact, in the three months to November the rank of the unemployed had the smallest quarterly fall since September 2013, with most people going into inactivity rather than employment.
        Even though this points to the U.K. economy slowing in the second half of 2014, economists say it has also given British workers greater power to negotiate their wages.
        Forecasts by the International Monetary Fund showed Monday the U.K. economy grew 2.6% in 2014. This figure was revised down from a previous estimate of 3.2%, after the Office for National Statistics said in December the British economy had expanded at a slower pace than previously thought. However, the U.K. would still outperform all other countries in the Group of Seven, the IMF said.
        Write to Jon Sindreu at jon.sindreu@wsj.com and Nicholas Winning at nick.winning@wsj.com
        (END) Dow Jones Newswires

        January 21, 2015 04:43 ET (09:43 GMT)

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