Commentary on the labour market statistics for March to May 2017

The labour market statistics for March to May 2017, released today, show a continued increase in employment. Wage data, however, continue to be a source of concern.

labour market statistics for March to May 2017

The latest labour market statistics report a continued and marked increase in employment, with a corresponding fall in unemployment, with the unemployment rate now down to 4.5%.

The number of full-time employees increased over the three months to May by some 142,000. There was also an increase of 46,000 in the number of part-time employees. While there is therefore much good news, the total number hours worked – both by full-time and part-time workers – has fallen slightly over the last quarter. This reflects a longer term reduction in the proportion of workers working over 45 hours per week.

Regional disparities in the unemployment rate have continued to become less severe. The biggest falls in unemployment over the last quarter have been in Scotland and North East England. In the North East, the unemployment rate now stands at 6%. Recent evidence suggests, however, that much of the employment growth in this region has taken the form of insecure employment. As yesterday’s publication of the Taylor Review indicates, the quality of jobs is important as well as the quantity.

The number of vacancies remains high, but has fallen slightly over the last couple of months. There has been a sharp decline in vacancies in the real estate sector over the most recent quarter, possibly reflecting the slowdown in the housing market.

The wage data continue to be a source of concern. Including bonuses, the preferred three month average figure for the growth in average weekly earnings slipped down to 1.8% in May, compared with 2.1% in April. This figure is now 2% or lower in all sectors except for distribution and hospitality. The less reliable single month figure for the whole economy also now stands at 1.8%.

More broadly, the performance of the labour market should be viewed alongside the general prognosis for the development of the UK economy over the coming months. In this context, the economic uncertainties surrounding the Brexit negotiations have been highlighted today in a new report from Moody’s, which expresses pessimism about the likelihood of a good outcome and which emphasises the increased political and fiscal risks following on from the outcome of the recent general election.