It’s freezing outside and quite Christmassy, so not the ideal day for looking at the monthly jobs stats. For once, however, they brought a bit of cheer. Not a great deal, maybe, but a bit.
On the disappointing side, the rate of UK private sector job growth, having achieved a pace in the summer that Usain Bolt would have admired, has slowed considerably following the Olympics boost. The third quarter increase of around 40,000 was only about half that achieved in the second. However, there were still easily enough net new private sector jobs (65,000) to offset continued public sector job cuts of 24,000. This along with a rise in the number of economically inactive people resulted in a further quarterly fall in unemployment (down 82,000), with all the new jobs being full-time posts for employees with permanent contracts. Moreover, the rise in full-time jobs for employees appears to be encouraging more self-employed people to seek employers rather than go it alone (self-employment is down 23,000 on the quarter). So while the pace of job creation has slowed it looks as though underemployment, and thus the overall shortage of work, has fallen slightly.
It’s also good to see a continued fall in youth unemployment of 72,000, with the best news being for the core of youth jobless not in full-time education, who are probably being helped by the government’s Youth Contract measures. The number of people long-term unemployed has remained unchanged, though with total unemployment having fallen even more the percentage long-term unemployed has increased.
But the news is less good on the pay front. Had a sharp jump in bonus payments not boosted pay packets, the latest earnings figures would have registered a sharp fall in the rate of growth rather than a steady 1.8%. With consumer price inflation still stubbornly running well above 2%, this suggests the real pay squeeze is set to continue for some time whatever happens to jobs and unemployment.