The
Office for National Statistics published the October Labour Market Statistics
First Release this morning, which includes Labour Force Survey data for the
period June to August 2012 and Jobseekers’ Allowance (JSA) data for September. The
data points to an increase in employment levels compared to the previous
quarter (March to May 2012) and a corresponding fall in unemployment. The more timely JSA claimant count also fell
compared to the previous month, although the claimant rate has remained
flat. Early press coverage has described
this positive picture as “unexpected”. Some commentators had expected today’s
release to show flat unemployment levels compared to the previous quarter,
following the August fall in the number of adults unemployed in the UK, which
had been attributed to the temporary impacts of the Olympics and principally
affected London. The better than
expected data this month has fuelled speculation that the UK labour market
could be experiencing a more sustained recovery.
The
latest data does show a significant increase in full-time employment, along
with part-time employment, with the total number of people in work reaching
record levels (since comparable records began in 1971).
However,
earnings growth remains very weak, at 1.7% (including bonuses), well below the
rate of inflation – despite the recent falls on both the RPI
and CPI measures. Moreover, today’s
ONS release includes estimates of hours worked and labour productivity – which
both suggest that the UK economy continues to be operating well below
capacity. Average weekly working hours
decreased, affected by the distribution of public holidays in the period and,
perhaps more significantly, by the sustained increase in the proportion of
adults working part-time observed over successive quarters. As mentioned in our
briefing on the August statistics, weak productivity performance indicates
that UK employers are ‘hoarding’ labour, in order to retain skilled staff
despite falling production levels. This
month’s release indicates a further fall in output per worker alongside a
corresponding increase in unit labour costs, suggesting that retention of such
spare capacity may not be sustainable unless output starts to pick up.
Unemployment
and Employment Rates
LFS
data for the three months to August 2012 indicate that the unemployment rate[1]
has fallen by 0.2 percentage points on
the previous quarter, to 7.9% of the economically active population, which is
equivalent to 2.53 million individuals.
This is 50,000 lower than the previous quarter and also down on the same
period a year earlier. The number of young people (16-24 year olds) who
are unemployed also fell, by 62,000 on the previous quarter – to reach 957,000,
falling below the symbolic 1 million young people unemployed for the first time
since last autumn.
The
employment rate (for adults aged 16-64) increased by 0.5 percentage points on
the previous quarter, to 71.3%. The total
number of people estimated to be in employment is now 29.59 million, up 221,000
on the previous quarter. The number in employment is the highest since
records began in 1971, but the employment rate remains lower than its
pre-recession peak of 73% (March-May 2008).
Both
full-time and part-time employment increased, by 88,000 and 125,000
respectively. The number of people in
part-time employment reached 8.13 million, which remains at a record high level
(since comparable records began in 1992).
Earnings
Estimates
Earnings
estimates continue to point to very weak growth in average pay levels, with
regular pay (excluding bonuses), rising by only 2% between the three months to
August 2012 and the same period a year earlier.
Total pay (including bonuses) increased by 1.7% . Despite being lower than the rate of
inflation, the increase in pay on both measures (regular and total pay) has
risen by 0.1 percentage points compared to the growth rate reported between the
three months to July 2012 and the same period a year earlier. Total pay and regular pay increased in both
the public and the private sector.
Job Seekers’
Allowance Claimants
Jobseekers’
Allowance (JSA) claimants in September 2012 fell by 4,000 on the previous month,
to reach 1.57 million. The claimant
count rate was 4.8%, unchanged from the previous month but down 0.1 percentage
points from the same period a year earlier.
Redundancies
and Vacancies
In the three months to August 2012, 131,000 people had
become redundant, down 16,000 from
the previous quarter and down 18,000 from the same period a year earlier.
The number of vacancies
(advertised through Jobcentre Plus) in the three months to September 2012 was 476,000
- up 3,000 compared to the previous
quarter and up 17,000 on the same period a year earlier. The number of ILO unemployed adults to every
one vacancy in the three months to August 2012 has fallen to 5.3, compared to
5.5 in the previous quarter.
Key Regional
Developments
- The level of unemployment decreased compared to the previous quarter in the North East, North West, Yorkshire and the Humber, and the East Midlands – most significantly in the North East, by 11,000 and 0.9 percentage points, and in the North West, by 40,000 and 1.1 percentage points. However, the North East continues to have the highest unemployment rate of the nine English regions, at 9.9%.
- Unemployment levels increased slightly in the West Midlands, by 5,000, and London, by 10,000, although rates remained flat in these two regions and in the East of England, the South East and the South West.
- In the East Midlands, employment increased on the previous quarter, by 4,000 (or 0.2 percentage points), to a rate of 71.9% (above the UK average of 71.3%). Unemployment fell more significantly in the East Midlands, by 13,000 (or -0.5 percentage points), to a rate of 7.8% (slightly lower than the UK average of 7.9%).
[1]
According to the International Labour Organisation (ILO), this is defined as
those who are out of work but available for, and actively looking for,
employment within a set period. This is
expressed as the proportion of ‘economically active’ (employed plus unemployed)
adults.
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