Commentary on the labour market statistics for April to June 2017

The labour market statistics for April to June 2017, released yesterday, show a continuation of recent trends, with employment rising and unemployment falling. The evidence on pay, however, is mixed.

labour market statistics for April to June 2017

The latest labour market statistics show a continuation of recent trends, with employment rising and unemployment falling. There have been substantial gains in full-time and part-time employment (up 97,000 and 37,000 respectively over the quarter), and self-employment – particularly part-time – has also risen. There have been particularly strong gains for the 25-34 age group. The overall unemployment rate is now down to 4.4%.

Unemployment remains highest in the North East, at 6.0% – despite a marked fall over the last year in that region. In the South East (outside London) the unemployment rate is now just 3.2%.

The evidence on pay is mixed. The single month measure of growth in total pay shows an acceleration from 2.1% in May to 2.8% in June. This, however, is dominated by a large increase in bonus payments in the financial and business services sector. The preferred three month average measure of regular pay shows a small increase from 2.0% in May to 2.1% in June. Overall, the evidence suggests that, despite the low headline rate of unemployment, there remains a lot of slack in the labour market.

With employment continuing to rise while rates of immigration fall, this slack is likely to diminish over the coming months. But, with pay settlements now well below the rate of price inflation, there is no evidence to suggest that this is turning into sustained wage pressure.