Commentary on the labour market statistics for June to August 2017

The labour market statistics for June to August 2017, released yesterday show that unemployment has fallen further and the 3 month average measure of total pay growth indicates that earnings have risen by 2.2% over the last year.

labour market statistics for June to August 2017

The latest labour market statistics follow many of the trends observed in recent months. Unemployment has fallen further, by 52000 over the quarter to August, and the rate now stands at 4.3%. The rise in employment has come mainly from part-time jobs, though – there was a 25,000 rise in the number of full-time employees, but a 69,000 increase in the number of part-time employees. Meanwhile there has been a slight fall in full-time self-employment, and a rise in part-time self-employment, suggesting further increased activity in the gig economy. While progress has been good, it is clear from a detailed analysis of the data that the apparently low rate of unemployment is still concealing some slack in the labour market.

In the most recent quarter for which data are available, there were large increases in employment in manufacturing – aided by the boost to production provided by the decline in the exchange rate. This increase may well, owing to the nature of the fall in the exchange rate, turn out to be a one-shot event. There have also been large increases in employment in IT and in hospitality and catering. There was a sharp fall in employment in real estate.

Of particular interest in this release are the data on pay. The 3 month average measure of total pay growth indicates that earnings have risen by 2.2% over the last year. This represents no change on the previous month. There has been some acceleration in pay in the financial and business services (where pay growth is now 2.7%, or, on the less reliable single-month measure, 3.1%). But in many industries – including the public sector, manufacturing, construction and distribution – pay growth is still below 2%. This does not suggest that it is yet time for the Bank of England to be hiking interest rates.

The rate of unemployment is now below 6% in all regions. Over the most recent quarter for which data are available, the West Midlands has performed particularly well, with a fall in the unemployment rate of 0.7 points, to 5.2%.