Statistics released earlier today portray a labour market that is continuing to develop steadily. Over the quarter to May, unemployment fell by some 54000, and the unemployment rate now stands at 4.9%. This has largely been the result of a huge growth in self-employment: numbers in full-time self-employment grew over the quarter by over 100000. At the same time, numbers of employees in employment also grew – by 22000 (full-time) and 27000 (part-time).
Sectors that have seen a large amount of job creation include construction (51000 extra jobs over the quarter), professional, scientific and technical services (39000) and health and social services (44000).
The increase in activity in the construction industry (which likely accounts for much of the rise in self-employment) is reflected also in pay increases in that sector – the single month measure of year on year increase of total pay in construction amounts to some 9%, well above the 2.1% average across all industries. Indeed pay growth overall remains fairly modest, especially when viewed in the context of rising price inflation (which rose to an annual rate of 0.5% in June). The latest figures on construction output indicate some fragility, and it is not clear how long the boom in employment and pay in this sector will continue.
Whether the labour market more broadly can continue to demonstrate signs of strength over the months ahead will depend critically on the impact of Brexit on the economy. Uncertainty has already hit business investment. Clarity on the way forward and resolution of trade deals – whatever form they might take – are preconditions for sustained labour market health.
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