Article 3AJWC UK employment total drops, but pay growth picks up - as it happened

UK employment total drops, but pay growth picks up - as it happened

by
Graeme Wearden
from Economics | The Guardian on (#3AJWC)

Economists warn that the UK labour market may have peaked, as the number of people in work falls for the second month running

12.44pm GMT

Right, time for a recap.

Evidence that Britain's long jobs boom has come to an end has emerged after official figures showed the number of people in work fell by 56,000 in the three months ending in October.

"Employment stayed close to its record high and while up on a year ago, declined compared with the previous three months. Unemployment also fell, but there was a rise in the number of people who were neither working nor looking for a job. Meanwhile the number of vacancies continues to grow, reaching a new record high.

"There has been a slight pick-up in pay growth in cash terms, which means that although earnings are still growing less than inflation, the gap has narrowed."

Related: Fall in employment rate spells end of UK jobs boom

12.33pm GMT

In another worrying move, the number of young people who aren't in work or education has risen in the last quarter.

Dr Carole Easton OBE, the chief executive of the Young Women's Trust, says many aren't receiving the support they need to get into work.

"26,000 more young people are now economically inactive and out of education - a dramatic increase on the last quarter.

"Young women in particular are telling us they want to work but hundreds of thousands are getting shut out of the jobs market, including by a lack of convenient childcare and support. While the Government focuses on reducing its unemployment figures, 346,000 young women who are not included in the numbers are being left jobless and forgotten.

11.41am GMT

The opposition Labour party has dismissed the government's argument that the UK labour market is strong.

Shadow work and pensions secretary Debbie Abrahams says:

"Today's figures are further evidence of Tory economic failure, only a day after inflation rose to its highest level in over five-and-a-half years.

"Both employment and real wages are falling, while the price of household essentials balloons, leaving millions of people worse off than they were in 2010.

11.32am GMT

Ashwin Kumar, Chief Economist at the independent Joseph Rowntree Foundation, has dug into today's data - and discovered that low-paid workers are suffering particularly badly from the weak pay growth.

Kumar says:

"Wages are yet again rising more slowly than prices. Combined with frozen benefits, 2017 has been a year of stress for family finances. But people working in retail and hospitality, who already face low wages, are being hit particularly hard.

In real terms, earnings have fallen by 1.4% since last year in these sectors, compared to a 0.4% fall for the average worker.

11.20am GMT

Today's report also shows that the unemployment rate for women has hit a record low, at just 4.1%.

The increase in the employment rate for women over the last few years has been partly due to ongoing changes to the State Pension age for women, resulting in fewer women retiring between the ages of 60 and 65.

10.56am GMT

Ian Brinkley, acting chief economist at the CIPD, the professional body for HR and people development, also suspects that Britain's labour market is stalling.

He says:

"These figures suggest the UK's employment engine has begun to splutter. The fall in the total number of people in work, down 0.2%, is primarily driven by a fall in full-time self-employment.

Coupled with a fall in unemployment, this appears to point towards constraints in the overall supply of labour rather than a decline in demand. There is a strong possibility that the continued expansion of the labour market has hit its ceiling. In response, employers would be wise to invest more in their existing workforce, especially in light of recent declines in the number of apprenticeships.

10.49am GMT

Despite the drop in employment, the number of unfilled positions in the UK has hit a record high.

There were 798,000 job vacancies in the September-to-November quarter, which is the most since comparable records began in 2001, as this chart shows:

The rapid growth in labour supply of recent years has seemingly gone into the reverse. The main reasons for this are a sudden surge in student numbers and a fall in the number of citizens of the central and eastern European countries (the A8) that joined the EU in 2004.

In principle, this drop in available labour should be good news for unemployed jobseekers.

"The number of people in employment has fallen, but the unemployment rate remains low and there are still opportunities for job seekers with vacancies at a record high.

10.33am GMT

Today's jobs reports shows that the number of public sector workers rose by 19,000 between June and September, to 5.49 milllion.

The ONS says:

The largest contributor to these quarterly and annual increases in public sector employment was the National Health Service.

10.25am GMT

Britain's cost of living squeeze could end early next year, reckons Ben Brettell, senior economist at Hargreaves Lansdown:

The pay squeeze continues for now, but with wages growing a little more strongly and inflation set to fall back in the new year, this looks like it'll come to an end in the next few months.

We should remember, however, that the only true driver of real pay growth and rising living standards is productivity growth. This is something the UK has struggled with since the financial crisis, and as yet nobody seems to have solved the puzzle.

10.19am GMT

TUC General Secretary Frances O'Grady doesn't see any festive cheer in today's labour market report.

She says:

"2017 has been a bleak year for living standards.

"Real wages have now fallen for the last eight months in a row. And working people will be worse off this Christmas than they were a decade ago.

10.19am GMT

The Minister for Employment, Damian Hinds, claims that the UK labour market is still strong - even though real wages are still falling.

"We're ending the year on a strong note with figures showing the unemployment rate has fallen every month in 2017, and is now at the lowest it's been in over 40 years.

"Employment is at a near-record high, and there are over 3 million more people in work now compared to 2010 - that's more than the population of Greater Manchester. Universal Credit is helping people get into work quicker, and ensuring they get more money in their pockets for every hour they work.

10.11am GMT

Geraint Johnes, Research Director at the Work Foundation and Professor of Economics at Lancaster University Management School, says today's jobs report is packed with concerns:

The latest labour force statistics provide further evidence that the labour market has peaked and is now starting to turn down. Employment fell by some 56000 over the quarter to October. While there was a small increase in the number of full-time employees, there was a large fall (some 65000) in the number of full-time self-employed workers. Unemployment, meanwhile, continued to fall, and now stands at 4.3%. The simultaneous fall in employment and unemployment is possible because there has been a large increase (115000 over the quarter) in the number of economically inactive.

"There have been large falls in employment in the distribution sector (38000) and in information and communication (37000). Meanwhile numbers employed in professional, scientific and technical fields and in administration and support have increased.

10.03am GMT

Jeremy Cook of foreign exchange firm World First isn't impressed by today's jobs report

Shorter UK jobs numbers: those with jobs are getting poorer at a slightly slower rate than those without, and now there are 56,000 more of the latter

Employment rate has started to stall, on basis of recent jobs figs. Hardly a disaster, but may suggest UK labour market finally turning pic.twitter.com/36l7vCEbq8

Real wages across UK still shrinking, mainly thanks to higher inflation. Here's the latest data from the @ONS pic.twitter.com/tmdUwEC99W

The UK Philips Curve. Still broken.

Jobs engine looks to be spluttering.

Wages a touch healthier - but well below inflation.

Scoring this as "not good".

9.57am GMT

9.50am GMT

This is not a great jobs report , despite the fall in unemployment:

Between May to July and August to October 2017 both employment and unemployment fell, while economic inactivity went up: https://t.co/iRqpSW7D11 pic.twitter.com/TANcC9u7Vy

9.50am GMT

Worryingly, the number of people receiving unemployment benefits (the claimant count) has risen by 5,900 in November, to 818,000.

October's figures have been revised higher too, to 6,500.

9.42am GMT

British workers are still suffering falling real wages, despite a pick-up in pay in the last quarter.

Today's jobs report shows that pay, including bonuses, rose by 2.5% in the last quarter, up from 2.2% last month.

9.36am GMT

Breaking! The number of people in employment across the UK has fallen, for the second month in a row.

There were 56,000 fewer people in work in the July-October quarter, compared to the previous three months. That's the biggest drop since May 2015, taking the total number of people in work down to 32.08 million.

9.07am GMT

The pound is creeping up this morning, on hopes that today's jobs report will show that pay growth (including bonuses) has jumped to 2.5% in the last quarter.

Sterling has gained 0.2% against the US dollar to $1.334, and is a little higher against the euro too at a1.136.

Although Britain's unemployment rate remains encouraging, sentiment could easily take a hit if wage growth fails to meet market estimations.

A situation where pay growth fails to pick up is likely to continue squeezing consumers, especially in view of inflation jumping to its highest level in almost six years at 3.1%.

8.44am GMT

Economist Rupert Seggins has created some useful charts to explain today's labour market report (which is released in 45 minutes):

1. UK unemployment rate figures today - consensus is for a fall to 4.2%, which would be the lowest rate since the 3 months to May 1975. pic.twitter.com/3SHy1Rub9z

2. Yesterday's inflation figures mean the pay squeeze is set to continue. Real regular pay set to fall c. 0.7%y/y (-0.6%y/y if you prefer CPIH). pic.twitter.com/UVjVkgI8iE

The big news last month was the 14,000 person fall in employment. Consensus is for a fall of 48,000 in October. pic.twitter.com/asbnQWfCdm

4. A sizeable 117,000-person rise in inactivity last month. More students and more people long-term sick. Meanwhile no's of retired & people looking after family fell. pic.twitter.com/9aOIv3uXn9

8.28am GMT

In the City, shares in Dixons Carphone have jumped by 7.5% in early trading after it reported its best ever Black Friday trading.

That makes amends for a 60% tumble in pre-tax profits over the six months to 28 October, when Dixons Carphone suffered from a slowdown in mobile phone sales.

Half year results out today good like for like trading profits impacted by non trading one off items flagged in August. We make most of our profit in the second half and are forecasting to be in line with market. All in all thank you for your heroic work this year!

8.24am GMT

Mike van Dulken of Accendo Markets is hoping for a cheering unemployment report today:

UK Unemployment (9:30am) is expected to drop to a fresh 42-year low of 4.2%, while Average Earnings (incl. bonus) accelerate to a 2017 high of 2.5% (still shy of inflation, which hit a new multi-year high of 3.1% yesterday) and the ex-bonus print holds firm at 2.2%.

8.16am GMT

Here are the City consensus forecasts for today's UK jobs report:

7.59am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Related: Inflation rises to 3.1%, adding to UK cost of living squeeze

The important element here will be hourly wages, which could give an indication as the extent to which UK household purses are being squeezed. Average hourly wages are expected to be 2.5% in the three months to October, which is a respectable 0.3% increase from the three months to September.

This would represent a rare closing in the gap since Brexit, between the cost of living and wage growth.

Yellen's press conference should prove to be a non-event given her recent testimony in Congress and that she will soon be stepping down once Powell is confirmed. The bigger question therefore is whether the Fed will significantly alter its economic and rates projections.

Our US colleagues' view is that they would prefer to wait until March to make significant upgrades when they are likely to be in a better position to model the impact of the looming tax plan.

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