Our labour market analysis

June 2018

Learning and Work Comment

The labour market figures published on 12 June are another set of positive set of numbers with a strong rise in employment and falling unemployment and economic inactivity in the latest quarter. However, weak growth raises concerns about whether such positivity will be sustained.
  
Duncan Melville, Chief Economist at Learning and Work Institute, commented: 
  
‘The increase in employment between February to April 2018 on the previous three months was again strong at 146,000. New workforce jobs numbers, which are only released every three months, also showed a substantial increase of 123,000 in the quarter to March 2018, consistent with above Labour Force Survey based numbers. Unemployment and economic inactivity amongst people of working age have fallen again. The employment rate has stayed at a record high, the unemployment rate is at its lowest level since 1975 and the working age inactivity rate remains at a record low. Vacancy levels also increased after falling in last month's figures and are at historically high levels. 
  
Wage growth has slowed very slightly in today's figures from 2.9% annual growth in last month's figures to 2.8% today. However, one should not place much significance on such a small change in wage growth. Real wage growth continues to be positive at 0.4% a year. 
  
Today's numbers for the labour market stand in contrast with data for economic output released yesterday. The National Institute for Economic and Social Research estimates that the UK economy grew by only 0.2% in the three months to May 2018 compared to the previous three months. In April, manufacturing output fell by 1.4%, the largest monthly fall in output since October 2012, while in the first quarter of this year construction output fell by 2.7%, the largest quarterly fall since the second quarter of 2012. Economic growth has been weak for some time now. The concern must be that at some point this economic weakness leads to a fall in employment and a rise in unemployment. ’
  
Paul Bivand, Learning and Work AD for Statistics and Analysis said: "Our chart of the claimant count is showing that, on our seasonally adjusted figures, claimant count is continuing to rise, while the ONS estimate is showing a small fall. However, in absolute numbers, our figure is the lowest of the three (counting the unadjusted figure as the third). Our estimate of the claimant count is 3,200 lower than the ONS version, but rose 4,400 this month. Last month, the ONS version rose 28,200, while the L&W estimate was up 16,300. The L&W series is thus smoother. The aim of seasonal adjustment is to identify genuine change-points as opposed to normal seasonal patterns." 
  
Employment increased by 146,000 between November 2017 to January 2018 and February to April 2018. In the last 12 months employment is up by 440,000. 
  
Unemployment has fallen by 38,000 between November 2017 to January 2018 and February to April 2018. and the unemployment rate reduced by 0.1 percentage points to 4.2% in the quarter the lowest level since 1975. 
  
Economic inactivity is down by 72,000 between November 2017 to January 2018 and February to April 2018. and the inactivity rate reduced by 0.2 percentage points to 21% in the quarter. 
  
The ONS national claimant count has fallen by 7,700, while the L&W estimate rose 4,400. These take account of normal seasonal effects but adjusted figures are not published for local areas. The actual number of claimants, nationally, has fallen by 22,300 in the month to May. Therefore, it should not be surprising that figures for local areas will show falls compared to the national picture. 
  
The proportion of people leaving the claimant count (or the ‘leavers rate’) has risen. At 14.8%, it is still well below the level in early 2015 of 18.1%. Jobseeker’s Allowance off-flow rates for JSA claimants fell, except for those with shortest durations. 
  
Youth unemployment is showing a quarterly fall. There are still 520,000 unemployed young people, and 354,000 (5% 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 51.5%. 
  
A total of 48,000 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 has fallen by 22,000 this quarter. Self-employment is up by 34,000 this quarter. The number of employees is up by 150,000 in the quarter. Involuntary part-time employment rose by 13,000 this quarter to 1 million, 11.9% of all part-time workers.The proportion remains much higher than the 7.4% in 2004.

Key Facts

  • Unemployment is 1,416,000, is down by 9,000 from last month's published figure (quarterly headline has fallen by 38,000) and the unemployment rate 4.2%, showed no change on last month and fell by 0.1 percentage points on last quarter.
  • The ONS figure for claimant unemployed is 886,200, down by 7,700 on last month, and the claimant rate is 2.5%.
  • The number of workless young people (not in employment, full-time education or training) is 973,000, and fell by 26,000 on the quarter, now representing 13.8% of the youth population (decreased by 0.3 percentage points).
  • Youth unemployment (including students) is 520,000, and fell by 17,000 on the quarter.
  • There are 1.8 unemployed people per vacancy. Learning and Work Institute estimates this figure may decline slightly next month.
  • The employment rate is 75.6% , (the same as on last month’s published figure and has risen by 0.3 percentage points in the preferred quarterly measure).