Wednesday 24 January 2018

Latest ONS Jobs Report offers a very mixed yet familiar picture of the UK labour market

The UK Office for National Statistics this morning published its latest release of data on the state of the labour market (which British commentators, influenced by the US BLS monthly equivalent, increasingly refer to as the official UK 'Jobs Report'). These latest (mainly rolling quarterly) data  relate mostly to the three months to November 2017.

The picture painted by the release is very mixed.

After a period of contraction in the overall size of the UK workforce, the number of people participating in the labour market expanded by 99,000 to 33.64 million in the latest quarter, mostly due to a fall of 79,000 in the number previously economically inactive. 

Employers who have recently been struggling to hire staff took full advantage of this, enabling employment to rise by 102,000 to 32.21 million, lifting the employment rate back to a joint record high of 75.3%. But with job creation only slightly higher than growth in the labour supply, unemployment is little changed (down just 3,000, at a rate of 4.3%). As a result, the degree of tightness in the labour market is also unchanged, although with the balance of job creation in the latest quarter tilted strongly toward full-time jobs for employees (up 173,000) and away from self-employment (down 82,000) the rate of growth of average weekly earnings excluding bonuses has ticked-up to 2.4%. Unfortunately, however, higher price inflation at the end of 2017 more than wiped out this improvement, intensifying the squeeze on real wages which fell by 0.5%. 

The resulting pattern is thus very familiar – record jobs and a low rate of unemployment but still less spending power for the average worker.