The latest official jobs and productivity figures, published earlier this morning by the Office for National Statistics, suggest that UK employers are finally having to respond to much tighter labour market conditions as the economy edges closer to full employment.
Although the economy continued to grow, there was no net hiring in the third quarter of the year (total employment fell marginally, by 14,000), with businesses cutting full-time jobs and switching to increased use of part-time workers. The combination of an overall fall in total hours worked (down 0.5%) and continued growth in output saw a very welcome quarterly surge in output per hour of 0.9% - the fastest rate of growth in labour productivity for six years. For the time being there is still no sign of a corresponding improvement in pay, with growth in average weekly earnings steady at 2.2% and real earnings still falling against a backdrop of high consumer price inflation. However, the likelihood of sustained improvement in productivity as employers continue to adjust to tighter labour market conditions offers hope of better pay prospects in the coming years albeit we are unlikely to enjoy job growth at the rapid pace seen since 2012.