Rate of growth of weekly earnings now well above the rate of inflation
Authors: Professor Geraint Johnes
17 December 2014
The latest release of statistics on the labour market offer almost uniformly good news. Employment levels continued to rise, by 115,000, in the latest quarter. Meanwhile unemployment fell by 63,000, with the headline rate of unemployment remaining at 6.0%.
The more detailed statistics suggest a continuing trend towards restoration of normality in the labour market. The number of employees in employment increased by 165000, with a reduction of 29000 in self-employment. Amongst those who are self-employed, the number working part-time fell by 34000 while the number working full-time rose slightly. Meanwhile the total number of people working full-time increased by 166000, and there was a reduction of 51000 in the number working part-time. This is all reassuring news. We have expressed concern in recent months about the high levels of insecurity that remain in the labour market. While this is still a concern, the latest figures indicate that we are clearly moving in the right direction.
The employment gains have been particularly pronounced in the utilities, transport and storage, and arts and recreation. The sharpest quarter-on-quarter change was in the North West, with an increase in employment of some 35000. This region has been performing exceptionally well of late; recent data on gross value added for 2013 showed it to be (along with Wales) the fastest growing region at 3.4%. Meanwhile employment declined in the most recent quarter in London and the South East – regions that have been seen as the engines of the recovery.
Arguably the most significant development this month has been the rise in the rate of growth of weekly earnings – up 1.8% on a year ago. This increase is now well above the rate of price inflation. The increase has been particularly marked in finance and business services (3.0%), with earnings in the construction industry also rising quickly (2.7%). The recovery in finance comes on the back of a steady increase over the last three months. In manufacturing, however, the rate of growth of earnings has moderated somewhat, reflecting muted growth in the production sector.
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