Our labour market analysis

October 2016

Learning and Work Comment

See the analysis in one page here

The labour market figures published on 19 October are worrying with a small rise in unemployment, but they could be just a blip.
 
Duncan Melville, Chief Economist at Learning and Work Institute, commented:
 
"Today's figures show a rise in unemployment of 10,000 in the three months to June to August. In addition, the rise in employment over the same period was 106,000. This is a deceleration on the quarterly rises in employment we saw in the figures released in the three months July to September. It is too early to say whether or not these figures are the first signs of a softening in the labour market in the wake of the referendum vote to leave the EU. They could be just a blip. The figures for the December 2015-February 2016 three-month period showed a rise in unemployment which was both preceded by and followed by falling unemployment. Hence today's figures could be another blip.
 
The rise in youth unemployment, and in particular, long-term youth unemployment is a source of concern. It makes the Youth Employment Convention coming up in December particularly timely.
 
Our view remains that the vote for Brexit and Brexit itself will have adverse impacts on the UK economy and labour market. In a separate release, the Treasury today published its latest survey of independent economic forecasters. The consensus amongst independent forecasters is that by the end of 2017, the ILO unemployment rate is expected to rise to 5.4% which implies an increase in unemployment of around 150,000 compared to the numbers announced today. "
 
The claimant count figures in this report do not include claimants under the Universal Credit Full Service (the digital service). Between May and August this expanded to 16 extra Jobcentres and this rollout is evident in UC claim figures as the new claims that are shown (which can only be non-digital) drop towards zero in the relevant postcode areas. Therefore, the claimant count is being under-recorded.
 
Employment rose by 106,000 between March to May 2016 and June to August 2016. In the last 12 months employment has grown by 560,000.
 
Unemployment rose by 10,000 between March to May 2016 and June to August 2016, and the unemployment rate remained at 4.9% in the quarter, the lowest level since 2005.
 
Economic inactivity fell by 65,000 between March to May 2016 and June to August 2016, and the inactivity rate fell 0.1 percentage points to 21.5% in the quarter, a new record low.
 
The small rise 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, fell by 10,200 in the month to September, compared to the adjusted rise of 700. 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 fallen. At 16.8%, it is now well below the level in early 2015 of 20.7%. The number of new claims has fallen. Jobseeker’s Allowance off-flow rates for JSA claimants of short durations increased. Off-flow rates remain at historically high levels.
 
Youth unemployment is showing a quarterly rise, concentrated among the 18-24. Long-term youth unemployment has also ticked up, among those 6-12 months unemployed. There are 624,000 unemployed young people, and 414,000 (5.8% 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 59.7% and has risen by more than 20 percentage points since October 2012.
 
A total of 67,000 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 27,000 this quarter. Self-employment rose 7,000 this quarter and returned to last quarter's record proportion of employment. Employee numbers rose 121,000 in the quarter. Involuntary part-time employment fell this quarter by 42,000 to 1.1 million, 13.5% of all part-time workers. The proportion remains nearly double that in 2004.

Key Facts

  • Unemployment is 1,656,000, up 24,000 from last month’s published figure (quarterly headline up 10,000) and the unemployment rate is 4.9%, no change on last month and no change on last quarter.
  • The number of claimant unemployed is 776,400, up 700 on last month, and the claimant rate is 2.3%.
  • The number of workless young people (not in employment, full-time education or training) is 1,019,000, up 6,000 on the quarter, representing 14.2% of the youth population (up 0.1 percentage points).
  • Youth unemployment (including students) is 624,000, up 7,000 on the quarter.
  • There are 2.2 unemployed people per vacancy. Learning and Work Institute estimates this figure may rise next month.
  • The employment rate is 74.5% (no change on last month’s published figure and up 0.1 percentage points in the preferred quarterly measure).