Commentary on the labour market statistics for July to September 2017

The labour market statistics for July to September 2017, released today , show employment and unemployment falling. The evidence on pay, however, is mixed.

The latest labour market statistics show unemployment continuing to fall – by some 59000 between the second and third quarters of this year. The unemployment rate now stands at 4.3%.

The most recent fall, however, is due largely to a large increase in the number of people deemed economically inactive. This total has risen by 117000 over the quarter, much of this increase concentrated in the 18-24 age group. Over the most recent quarter, there has been a marked fall in full-time employment – a reduction of 29000 full-time employees and 41000 full-time self-employed workers. Meanwhile, part-time employment has risen, with an increase of 18000 part-time employees and 45000 part-time self-employed. Inasmuch as it continues a trend towards greater casualisation and insecurity in the labour market, this should be noted as a cause for concern. Overall the level of employment has fallen.

In the wake of last week’s interest rate hike, the most eagerly awaited data in today’s release concern earnings. Both the Bank of England’s agents’ reports and the CIPD have recently noted a slight uptick in pay growth. The preferred 3 month average figure in the latest official data do not confirm this uptick – the annual rate of growth of total pay is down to 2.2% from 2.3% a month ago. However, the less reliable single month estimate may be telling a different story – it is up from 2.4% to 2.6%. Wage growth now appears to be particularly strong in construction and in the financial and business services. While it is possible to see some tightening of the labour market in some areas, leading to a marginal increase in wage pressure, this needs to be viewed alongside the shift to part-time employment and a figure for total employment that looks as though it is peaking.