The latest labour market statistics show a continued increase in the overall level of employment, and a fall in unemployment. The number of full-time employees increased by 61000 over the last three months of 2018, and the corresponding number of full-time self-employed workers rose by 47000. There was also increases in part-time employment. Meanwhile, unemployment fell by some 14000, and the unemployment rate now stands at 4.0%.

These good figures do however conceal some signs that the growth in the labour market is stalling. The total number of hours worked across the whole economy fell slightly in the last quarter. There was also an increase in the rate of redundancies.

This statistical release is keenly watched for data on pay. In recent months this has been accelerating. The latest data give rather less cause for optimism. Indeed, total pay did not increase at all in the last three months of last year. Comparing total pay in December 2018 with that of December 2017 shows a 3.4% increase on the preferred three month measure, but the less reliable single month measure suggests a slowing to 2.8%.

The pay data will continue to be closely monitored, not least because the combination of slower output growth and continued growth in employment numbers suggests that productivity remains a challenge. Without productivity growth, real pay gains cannot be sustained. Alongside the slowing rate of price inflation, the evidence on the labour market does not suggest that there is room for the Bank of England to hike interest rates further over the next few months.

About the author

Geraint Johnes

Professor of Economics, Lancaster University Management School