Earlier today the UK Office for National Statistics (ONS)
published its latest monthly Jobs Report, mostly including data from the
quarterly Labour Force Survey for the three months to February 2020. According
to the ONS the labour market was ‘very robust’ at that time. But to me things looks
to have cooled before the Covid-19 lockdown measures placed the economy in a
coma to help save lives.
Although the number of people in work increased by a very
healthy 172,000 in the three months to February (taking the employment rate to
a record high of 76.6%), with fast growing labour supply this was not enough to
prevent a rise of 58,000 in the number unemployed, lifting the unemployment
rate back to 4%. Cooling was also evident in a fall in total hours worked, fewer
job vacancies and softening in the rate of growth of average weekly earnings,
which dipped to 2.9% excluding bonuses (or 1.3% in real terms). Moreover, the
ONS reports more up to date figures based on PAYE data which show that the
number of employees fell very slightly (by 0.06%) between February and March –
what will prove to be the beginning of the largest shake-out of UK jobs for at
least 40 years.
Given what we know about the massive shock to the
economy in the past month, it’s disconcerting to see that the jobs market was already
starting to look a bit off colour when Covid-19 arrived on our shores. Whether
this has implications for how well the market recovers after the lockdown is
unclear but in any case we won’t be seeing the unemployment rate anywhere close
to 4% for several years, with a peak of at least 8% the best we can hope for
even with the government’s welcome business support and job retention measures
in place. Some scenarios, such as that published last week by the Office for Budget
Responsibility, look to a jobless peak of 10%, albeit with a relatively swift
recovery. For the time being I remain on the ‘optimistic’ end of the opinion
spectrum. But uncertainty about the future course of Covid-19, let alone the
economy, makes me feel uneasy, and I look ahead as much with hope as
expectation.
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