The labour market figures published on 21 February do not provide a clear-cut message as to where the labour market is heading.
Duncan Melville, Chief Economist at Learning and Work Institute, commented:
"Last month I noted that the labour market figures provided some welcome New Year cheer. Today, matters are rather more confusing. While headlines will focus on the 46,000 quarterly rise in unemployment, the first for two years, the quarterly numbers overall suggest a rather more positive outlook with employment rising by 88,000 and working age inactivity falling by 109,000. Hence, the message that emerges from these figures is that unemployment has risen not because of labour market weakness but because people are entering or re-entering the labour market. Consistent with this story is the fact that vacancies have risen again and appear on an upwards trend.
The monthly changes, however, paint a different picture. Here, employment is down, and both unemployment and inactivity are up. Hence, the monthly numbers suggest that unemployment and inactivity are rising because of labour market weakness causing a decline in employment. The growth in unemployment has been concentrated among young people, with a quarterly rise of 66,000 unemployed under six months, suggesting a weakening youth labour market. Consistent with this story is the fact that the percentage of people who are working on temporary contracts because they cannot find a permanent job has increased again for the third month running. Which of these two stories is true will only emerge over the next few months.
Wage growth increased again this month to 2.5% (regular pay excluding bonuses) and has been gradually drifting up over the last eight months. Wage growth does still remain below inflation so we have now seen ten months of declining real pay. However, if inflation falls back as expected over 2018 and wage growth continues to rise gradually then we should see a return to positive real wage growth later in 2018."
Paul Bivand, Learning and Work Institute, Associate Director for Statistics and Analysis said:
"This month's figures are affected by Jobcentre Plus stopping taking claims for Universal Credit Live Service in areas that have not yet implemented Universal Credit Full Service. This has produced a small rise in JSA claims, in these figures covering just the first two weeks of January. Information (on NOMIS) on JSA is an order of magnitude better than the information on DWP Stat-Xplore on Universal Credit. So, for example, we can say that 42,000 people whose usual occupation was in sales jobs claimed JSA in January 2018. This is 64% of all new claimants. Given the failure of the January Sales to generate anything other than bad headlines for retailers, this is confirmation of the impacts on jobs"
Employment rose by 88,000 between July to September 2017 and October to December 2017. In the last 12 months employment has grown by 321,000.
Unemployment rose by 46,000 between July to September 2017 and October to December 2017. and the unemployment rate rose 0.1 percentage points to 4.4% in the quarter.
Economic inactivity fell by 109,000 between July to September 2017 and October to December 2017. and the inactivity rate fell 0.3 percentage points to 21.3% in the quarter.
The small fall in the 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 25,400 in the month to January, compared to the adjusted fall of 7,200. Therefore, 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 fallen. At 13.8%, it is now well below the level in early 2015 of 18.6%. The number of new claims for Jobseeker's Allowance has risen with the ending of new claims for Universal Credit Live Service at the start of January. Jobseeker’s Allowance off-flow rates for JSA claimants of most durations increased.
Youth unemployment is showing a quarterly rise. There are 547,000 unemployed young people, and 366,000 (5.2% 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 54.6%.
A total of 74,000 were counted as in employment while on ‘government employment and training programmes’, where the Office for National Statistics continues to count programme participants as ‘in employment’ by default. This number rose 2,000 this quarter. Self-employment fell 31,000 this quarter. Employee numbers rose 85,000 in the quarter. Involuntary part-time employment fell this quarter by 56,000 to 989,000, 11.8% of all part-time workers. The proportion remains much higher than the 7.4% in 2004.