UK Labour Market Statistics – February Release

Office for National Statistics data show that the UK labour market remained on an upward trajectory in the three months to December 2012. Employment in the final quarter of the year rose by 154,000, a surprising result given the overall contraction in output in the same period. Unemployment declined by a marginal 14,000 and the unemployment rate remained unchanged at 7.8%.

Encouragingly, full-time employment rose by a robust 197,000 while part-time working fell by 43,000 in the quarter. The number of people working part-time because full-time opportunities were not available also fell by 31,000.

Overall, the statistics paint a healthy picture of the state of the UK labour market which would have been cause for much cheer, had only the contrast to downbeat output trends not been so stark. Rising employment alongside a fall in output only raises questions about productivity trends and the ability of the economy to continue to absorb labour in the absence of robust output growth.

Consistent with weakening productivity, annual total earnings growth remained subdued at 1.4% y-o-y in December. With inflation set to remain above pay growth for at least another year, real incomes will remain under pressure through 2013.