october labour market update
TRANSCRIPT
LABOUR MARKET UPDATE
OCTOBER 2015
BUSINESSES ARE CREATING JOBS
Today’s labour market statistics are encouraging.
Positively, the number of people in employment rose
almost wholly due to businesses creating more jobs.
The other piece of good news in today’s data was the
decline in unemployment, which more than offset the very
recent increases in the jobless total. Positively, the drop
in unemployment was shared amongst people who had
been out of work and looking for work for both shorter
and longer periods of time. Youth unemployment also fell.
For those already in work, the picture was more mixed.
Indeed, although annual pay growth in the private sector
edged down a touch, extremely low inflation continues to
provide a boost to living standards.
Employment continues to rise...
Positively, today’s data shows that the number of people
in work has risen again and at a slightly faster pace than
we reported in last month’s labour market update.
In the three months to August, the number of people in
work rose by 140,000 (Exhibit 1). This compared to
growth of 42,000 in the three months to July.
As a result, the employment rate for those aged 16 and
over rose to 59.9%.
The growth in employment was primarily thanks to a
rise in the number of job openings offered by business
(+120,000 in the three months to August). The positions
filled were a mix of full- and part-time posts (growth of
+70,000 and +50,000 respectively).
In contrast, the number of people choosing to work for
themselves increased by a much smaller amount
(+29,000). The rise in self-employment was wholly
driven by those working for themselves on a part-time
basis.
Looking at the gender split, the growth in employment
mainly benefitted men. Employment amongst men rose
by 114,000 in the three months to August, while
employment amongst women increased by just 27,000.
The rise in employment seen in today’s data is of course
very welcome news. However, given the volatility in
employment growth in recent months it is difficult to
predict whether this pace of improvement will continue.
Indeed, provisional data shows that growth in the
number of job vacancies advertised by business has
started to level off (Exhibit 2 overleaf). This indicates
that, while firms are still looking to take on employees,
the rate at which employment rises may be slower in
Headline figures Rate Number
(000s)
Change on quarter in 000s
(% change)
Change on year in 000s
(% change)
Employment* (ILO) 59.9% 31,122 140 (0.5%) 359 (1.2%)
Unemployment* (ILO) 5.4% 1,774 -79 (-4.3%) -198 (-10.0%)
Youth unemployment (16-24) 14.8% 683 -46 (-6.3%) -50 (-6.8%)
Source: ONS 2015, October labour market statistics, June to August 2015 data *Aged 16 and over
Exhibit 1 UK employment (000s)
Source: ONS 2015, October labour market statistics
29,400
29,900
30,400
30,900
31,400
Ju
n-A
ug
13
Au
g-O
ct 1
3
Oct-
De
c 1
3
Dec-F
eb
14
Fe
b-A
pr
14
Ap
r-Jun
14
Ju
n-A
ug
14
Au
g-O
ct 1
4
Oct-
De
c 1
4
Dec-F
eb
15
Fe
b-A
pr
15
Ap
r-Jun
15
Ju
n-A
ug
15
2
future compared to the more rapid increases seen in early
2014 and early 2015.
...and unemployment falls once again...
In contrast to last month when we reported a small rise in
unemployment, today’s data reveals that unemployment
has recommenced a downward trajectory.
In the three months to August, the number of people
unemployed fell by 79,000. As a result, there were
1.8 million people out of work and looking for work.
Reflecting this change, the unemployment rate edged
down to 5.4%, very close to its pre-recession rate of
5.2%.
Positively, unemployment fell amongst people who had
been out of work for both shorter and longer periods of
time. In fact:
The number of people out of work for up to six months -
known as short-term unemployment - fell by 24,000.
Similarly, the number of people out of work for slightly
longer (over six and up to 12 months) dropped by
11,000.
And it was particularly encouraging that unemployment
amongst those who are furthest from the labour market
(out of work for over a year) fell by 44,000.
...particularly amongst young people
The picture on unemployment amongst young people also
looks rosier.
In the three months to August, the number of 16 to 24
year olds unemployed fell by 46,000. This meant that a
total of 683,000 young people were out of work and
looking for work.
As a result, the youth unemployment rate fell to 14.8%
and is therefore creeping back towards its pre-recession
rate of 14.0%.
To look at prospects for young people in more detail, the
statistics can be broken down into two age categories -
16 to 17 year olds and 18 to 24 year olds.
As Exhibit 3 shows, the unemployment rate amongst 16
to 17 year olds remained stubbornly high at 27.9% in the
three months to August, still some way off its
pre-recession rate of 24.2%.
In contrast, the unemployment rate amongst 18 to 24
year olds was much lower at 13.3% and is getting closer
to its pre-recession rate of 12.2%.
In the three months to August, 16 to 17 year olds
accounted for 20% of the total number of unemployed 16
to 24 year olds while the remaining 80% was accounted
for by 18 to 24 year olds.
Employment growth focused in four regions…
Although the growth in employment registered in today’s
data was shared across half of the UK’s nations and
regions it was most concentrated in four locations.
As Exhibit 4 overleaf shows, in the three months to
August, London (+63,000), the south west (+47,000), the
East of England (+32,000) and the East Midlands
(+23,000) saw the most impressive increases in
employment.
Employment also rose, albeit by a smaller amount, in
Wales (+9,000) and the south east (+5,000).
In the north west (+2,000), Northern Ireland (0) and the
West Midlands (-3,000) the number of people in work
remained broadly unchanged.
Exhibit 2 UK job vacancies (000s)
Source: ONS 2015, October labour market statistics
400
450
500
550
600
650
700
750
800
Jan-M
ar 08
Sep-N
ov 0
8
May-
Jul 0
9
Jan-M
ar 10
Sep-N
ov 1
0
May-
Jul 1
1
Jan-M
ar 12
Sep-N
ov 1
2
May-
Jul 1
3
Jan-M
ar 14
Sep-N
ov 1
4
May-
Jul 1
5
Exhibit 3 UK youth unemployment rate by age (%)
Source: ONS 2015, October labour market statistics
10
15
20
25
30
35
40
45
Jan
-Ma
r 0
8
Jun
-Au
g 0
8
Nov-J
an
09
Apr-
Jun
09
Sep
-No
v 0
9
Feb
-Ap
r 1
0
Jul-
Se
p 1
0
Dec-F
eb 1
1
Ma
y-J
ul 1
1
Oct-
De
c 1
1
Ma
r-M
ay
12
Aug
-Oct 1
2
Jan
-Ma
r 1
3
Jun
-Au
g 1
3
Nov-J
an
14
Apr-
Jun
14
Sep
-No
v 1
4
Feb
-Ap
r 1
5
16 to 17 year olds 18 to 24 year olds
3
In contrast, employment fell in Scotland (-6,000), the
north east (-7,000) and Yorkshire and Humber (-25,000).
…while the fall in unemployment was morewidespread
Although the growth in employment was concentrated in a
handful of regions, the fall in unemployment was more
spread out.
The sharpest falls in unemployment were seen in
London (-33,000), Yorkshire and Humber (-18,000), the
north west (-16,000) and the south west (-13,000).
Unemployment also dropped in the south east (-10,000),
the East of England and Wales (both -7,000) and the
East Midlands (-4,000).
The number of people out of work and looking for work
remained broadly unchanged in Northern Ireland
(-2,000) and the West Midlands (+1,000).
However, in the north east (+12,000) and Scotland
(+18,000) unemployment rose.
Pay growth ticks down slightly
Turning to the picture for those already in work, regular
pay growth (excl bonus) edged down very slightly.
In the three months to August annual growth in regular
pay in the private sector stood at 3.2%, down from
3.3% in the three months to July (Exhibit 5).
The picture was similar across the economy as a whole
where annual growth in regular pay dipped (to 2.8%,
from 2.9%).
Looking at total pay (incl bonus), annual pay growth did
speed up, but only very slightly. In the private sector,
annual growth in total pay crept up from 3.3% in the
three months to July to 3.4% in the three months to
August.
To achieve sustainably higher pay growth, a recovery
in productivity is necessary. It’s crucial that the Low
Pay Commission retains autonomy over future National
Living Wage rises to avoid unnecessary political
interference and help boost jobs.
The next labour market update will
be published on 11 November.
A CBI/Pertemps update will follow soon.
Exhibit 5 Annual growth in private sector regular pay (%)
Source: ONS 2015, October labour market statistics
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Oct
13
Dec 1
3
Fe
b 1
4
Ap
r 1
4
Ju
n 1
4
Au
g 1
4
Oct
14
Dec 1
4
Fe
b 1
5
Ap
r 1
5
Ju
n 1
5
Exhibit 4 Quarterly change in employment
Source: contains Ordnance Survey data © Crown copyright and database right 2015 and ONS 2015, October labour market statistics
4
For further information or a copy in large text format, please contact:
Rachel Smith Senior labour market policy economist,
CBI T: 44 (0)20 7395 8233
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