Our labour market analysis

April 2018

Learning and Work Comment

The labour market figures published on 17 April present a mildly positive view of the UK labour market with a small rise in employment, small fall in unemployment, and stable levels of economic inactivity in the latest quarter.

Duncan Melville, Chief Economist at Learning and Work Institute, commented:

Overall, today's numbers point to modest continued progress in the UK labour market. The increase in employment of 55,000 in the three months to December 2017 to February 2018, is a slowdown on the increase seen in last month's figures. Unemployment fell by 16,000 in the quarter and the numbers of people economically inactive remained stable. Vacancy levels remained high and stable at 815,000, and as anticipated last month real wages (after adjusting for inflation) rose for the first time after 11 months of declines. With the employment rate at a record high and the unemployment rate lower than any time since early 1975, we should not be concerned about the modest nature of the changes in employment and unemployment seen in today's figures.

Of some concern is that, despite the tight labour market, not all can find the type of work they would like: the percentage of people in temporary jobs because they cannot find a permanent one was unchanged this month, but has been on a rising trend in recent months. At the same time, the percentage of people working part-time because they cannot find a full-time job appears to have stopped falling. Finally, claimant unemployment appears to be on an upward (and rising) trend. Movements in the claimant count have often been a leading indicator of developments in the labour market more generally, so these numbers could indicate some future softening of the labour market in the next few months.’

Paul Bivand, Learning and Work AD for Statistics and Analysis said: "In this briefing we have revised our chart on the claimant count for unemployed benefit claimants. In addition to the seasonally adjusted count published by the Office for National Statistics, we are publishing the ONS's number before seasonal adjustment and our own seasonally adjusted figure. We have added our own estimates (using the European standard SEATS method) because the roll-out of Universal Credit (where there are different seasonal patterns from Jobseeker's Allowance) means that there is a case for changing the seasonal factors each month. This means revising older figures each month, something that ONS would be unlikely to do.

We brought this change in this month because the ending of new claims to Universal Credit Live Service (which took effect in January this year) and the extremely bad weather at the end of February might introduce further turbulence in the claimant count. In the event, the poor weather has not changed our estimated trends, although it remains possible that the delay in recording starts that is part of Universal Credit Full Service may produce further rises due to this in next month's figures."

Employment rose by 55,000 between September to November 2017 and December 2017 to February 2018. In the last 12 months employment has grown by 427,000.

Unemployment fell by 16,000 between September to November 2017 and December 2017 to February 2018. and the unemployment rate dropped 0.1 percentage points to 4.2% in the quarter the lowest level since 1975.

Economic inactivity fell by 2,000 between September to November 2017 and December 2017 to February 2018. and the inactivity rate stayed at 21.2% in the quarter, a joint record low.

The rise in the national claimant count takes account of normal seasonal effects but adjusted figures are not published for local areas. The actual number of claimants, nationally, rose by 16,089 in the month to March, compared to the ONS adjusted rise of 11,616. L&W's own seasonally adjusted estimate rose less, by 7,911. L&W's estimates are currently more effective at smoothing out normal seasonal changes than the ONS estimates. It should not be surprising that figures for local areas will show rises compared to the national picture.

The proportion of people leaving the claimant count (or the ‘leavers rate’) has risen. At 14.4%, it is now well below the level in early 2015 of 18.2%. The number of JSA new claims has fallen. Jobseeker’s Allowance off-flow rates fell again.

Youth unemployment is showing a quarterly fall. There are still 525,000 unemployed young people, and 351,000 (5.0% of the youth population) who are unemployed and not in full-time education.

The proportion of unemployed young people (not counting students) who are not claiming Jobseeker’s Allowance and therefore are not receiving official help with job search is now 52.3%.

A total of 60,000 were counted as in employment while on ‘government employment and training programmes’, where the Office for National Statistics continues to count Work Programme (etc.) participants as ‘in employment’ by default. This number fell 18,000 this quarter. Self-employment fell 18,000 this quarter. Employee numbers rose 103,000 in the quarter. Involuntary part-time employment rose this quarter by 8,000 to 1 million, 12.0% of all part-time workers.The proportion remains much higher than the 7.4% in 2004.

Key Facts

  • Unemployment is 1,423,000, reduced by 30,000 from last month’s published figure (quarterly headline has fallen by 16,000) and the unemployment rate is 4.2%, down 0.1 percentage points on last month and down 0.1 percentage points on last quarter.
  • The ONS figure for claimant unemployed is 855,300, up 11,600 on last month, and the claimant rate is 2.4%.
  • The number of workless young people (not in employment, full-time education or training) is 1,005,000, up 19,000 on the quarter, representing 14.2% of the youth population (up 0.3 percentage points).
  • Youth unemployment (including students) is 525,000, down 13,000 on the quarter.
  • There are 1.7 unemployed people per vacancy. Learning and Work Institute estimates this figure may rise slightly next month.
  • The employment rate is 75.4% (up 0.1 percentage points on last month’s published figure and up 0.1 percentage points in the preferred quarterly measure).