Dec
12
2012

UK Labour Market Statistics – December release

The recent momentum in labour market trends is rapidly easing in line with our expectations. While today’s labour market release still shows a rise in employment in the three months to October, the magnitude of this increase (of 40,000) is disappointing compared to earlier rises of 100,000 and 212,000 seen in the three months to September and August, respectively.

Given the recent spate of surveys predicting output weakness in the fourth quarter, we expect employment trends to only follow this weakening pattern in due course. It should also be noted that the latest quarterly figure includes two months (August, September) of the strong third quarter and only one month (October) of the expected weak fourth quarter. We expect the next few releases to reveal an even weaker trend once additional fourth quarter evidence gets included in the survey.

On the positive side, of the 40,000 jobs created, 44,000 were full-time jobs while part-time working fell by 4,000. Encouragingly, the number of people working part-time because they could not find full-time work fell by 20,000 (although this number is still a staggering 125,000 above the level seen a year ago). Unemployment also fell by 82,000 with the unemployment rate falling to 7.8%, It should, however, be kept in mind that we expect these trends to lose momentum as more fourth quarter evidence becomes available.

This release also provides an additional quarter’s data on workforce jobs which shows a modest rise of 43,000 in the third quarter. The only sectors to show any notable job creation were information & communication and health services. The largest number of jobs was lost in agriculture & fishing and finance & insurance. Overall, services added 68,000 jobs to the economy while manufacturing and construction showed no real change on this measure. Ongoing fiscal austerity saw another 24,000 jobs lost in public services.

Annual total earnings growth was subdued at 1.3% y-o-y in October. With inflation set to remain above pay growth for at least another year, real incomes will remain under pressure.

Looking ahead, we continue to expect a further weakening in employment trends in line with the recent gloomy business surveys and as the effect of the strong third quarter drops out of the quarterly Labour Force survey data.


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