UK Labour Market Statistics – December release

UK Labour Market Statistics – December release

This month’s release from the Office for National Statistics showed continuing strength in the UK labour market. The key features for August-October 2013, compared with May-July were:
•         Employment remained on a strongly rising path (up 250,000, taking the rise over the past year to 485,000 and reaching a new record of 30.086 million in employment) 
•         The number unemployed fell by 99,000
•         The unemployment rate fell from 7.7% to 7.4%
•         In contrast to buoyancy on the employment front, wage growth is still extremely muted. Average weekly earnings including bonus payments rose by 0.9%.
New data for other time periods showed that:

•         The number employed in the public sector in September 2013 was up 4,000 from June but down 52,000 from a year earlier
•         There were 568,000 vacancies in September-November, the highest level since 2008.
Analysis of the figures for August-October shows that full-time employment increased by a substantial 155,000, accompanied by a rise of 95,000 in the number working part time, a strongly positive outturn consistent with the broad-based output upturn in recent quarters. But amid the generally buoyant picture there remain some weaknesses. The number of people in part-time work because they could not find full-time employment rose by a further 25,000. And regular pay growth over the year to August-October at 0.8% was the lowest rise since comparable records began in 2001. Private sector pay growth picked up slightly but only to a mild 1.3% while the public sector posted a 0.3% decline.
The latest data confirm that output gains are driven by employment and that productivity remains very low. This may bode ill for future economic performance, but should support consumer spending into 2014. The recent substantial gain in employment should help offset the persistent gap between earnings growth (0.9% including bonuses) and CPI inflation (2.1% in November). This will allow household spending to grow steadily and sustain overall growth at a time when a stronger contribution from investment and exports is far from assured.
Peter Gutmann
Managing Consultant


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