UK labour demand rising, consistent with ongoing recovery
The latest official statistics indicate that labour demand is improving gradually, confirming recent survey evidence, including a rise in the Monster index of online job vacancies.
The labour force survey (LFS) measure of employment rose by 32,000 in the three months to January from the prior three months, with a 77,000 gain in private workers offsetting losses of 45,000 in the public sector (including 6,000 in the publicly owned banks). Full-time employment, moreover, rose by 75,000, outweighing a 43,000 decline in part-time working.
The improvement is confirmed by the workforce jobs measure, which rose by 77,000 in the fourth quarter. (This counts positions rather than people employed.) The LFS measure of workers with second jobs jumped by 41,000 in the latest three months – evidence, perhaps, of people seeking additional employment to offset the squeeze on real earnings from higher taxes and commodity prices.
Claimant-count unemployment, meanwhile, fell by 10,000 in February, maintaining the recent downward trend and suggesting that the economy remains on an expansion path despite weather-related GDP volatility – see first chart.
The three-month moving average of vacancies fell slightly in February but was 24,000 higher than in November, although two-thirds of this increase is attributed to hiring in connection with the 2011 Census.
The main disappointment in the figures is a 0.1 percentage point rise to 8.0% in the LFS unemployment rate in the three months to January as the labour force grew by more than employment. The LFS figures, however, often lag the claimant-count measure, suggesting a stabilisation or decline over coming months – second chart.
Government job cuts are progressing much faster than projected by the Office for Budget Responsibility. General government employment fell by 63,000 during the second half of 2010 compared with the OBR's November forecast of a decline of 40,000 by March 2012.
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