Wednesday, 20 June 2012

June 2012 Labour Market Statistics Briefing

This morning, the Office for National Statistics published their monthly Labour Market Statistics First Release – which includes Labour Force Survey data for the period February to April 2012 and Jobseekers’ Allowance data for May.  As in the last two months’ releases, unemployment has fallen on the Labour Force Survey measure.  However, this month’s data appears to be more widely positive than previously, with increases in both part-time and full-time employment (previous increases in total employment have been entirely driven by part-time employment).  The number of women in employment has also increased in this month’s estimates (increases in total employment in previous months have been mainly driven by rising male employment).

Despite this more positive picture, the UK labour market continues to be a concern.  Overall unemployment remains at a high level, at 2.6 million people, whilst the number of people unemployed for more than six months continues to increase.  Self-employment has also increased to the highest level since records began (in 1992), which, as discussed in one of our recent blog posts, is likely to include increasing levels of ‘necessity entrepreneurship’ – individuals being forced into self-employment, often in low pay, low skill activities, due to not being able to find a job.  Also of concern is the increase in the more timely measure of Jobseekers’ Allowance claimants, which  could indicate that the labour market is now weaker than the LFS data suggests.

Earnings growth remains very weak and is still significantly lower than the rate of inflation, despite yesterday’s news that inflation has fallen to 2.8% on the CPI.

Unemployment and Employment Rates
LFS data for the three months to June 2012 indicate that the unemployment rate[1]  has fallen by 0.2 percentage points on the previous quarter, to 8.2% of the economically active population.  This is equivalent 2.61 million individuals, 51,000 less than the previous quarter. However, the unemployment rate is still 0.5 percentage points higher than the same period one year earlier - and remains at the highest level since autumn 1996.  The number of unemployed men fell by 49,000 compared to the previous quarter, and the number of unemployed women fell only slightly, by 1,000 –  consistent with the picture of women being more adversely affected by recent developments than men, which we discussed in more detail in our briefing on April’s ONS release.

Youth unemployment (16-24 year olds) was also down 0.6 percentage points on the previous quarter to 21.9%.    This is equivalent to 1.01 million 16-24 year olds unemployed.

The employment rate (for adults aged 16-64) increased by 0.3 percentage points on the previous quarter, to 70.6%.  The number of people estimated to be in employment is now thought to be 291,000 lower than the pre-recession peak of 29.6 million (March – May 2008).  Unlike previous months, where total increases in employment were entirely or mainly driven by part-time jobs, this latest data suggests that the number of full-time workers has increased by 82,000 on the previous quarter.   However, this has still been exceeded by an increase in part-time employment of 83,000.  Therefore the number of people in part-time jobs because they cannot find full-time employment remains at a record level, at 1.4 million.  Self-employment has also increased in the three months to April, by 84,000 on the previous quarter, and now stands at 4.2 million – the highest level since comparable records began in 1992.

Earnings Estimates
Earnings estimates continue to point to very weak growth in average pay levels, with regular pay (excluding bonuses), rising by only 1.8% between the three months to April 2012 and the same period a year earlier – although this is up slightly (0.2 percentage points) on the growth reported last month.

Job Seekers’ Allowance Claimants
Jobseekers’ Allowance (JSA) claimant unemployment for May 2012 increased by 8,100 on the previous month, to reach 1.6 million.  This also represents an increase of 96,300 on the same period a year earlier.  The claimant count rate was 4.9%, unchanged from the previous month (but 0.3 percentage points higher than the same period a year earlier).

Redundancies and Vacancies
In the three months to April, 155,000 people had become redundant, down 18,000 from the previous quarter and but up 39,000 from the same period a year earlier.
The number of vacancies (advertised through Jobcentre Plus) in the three months to May 2012 was 465,000, up 1,000 compared to the previous quarter and up 7,000 on the same period a year earlier.  The number of ILO unemployed adults to every one vacancy has remained unchanged from the previous quarter, at 5.7.

Key Regional Developments
  •     Despite falling in the UK overall, unemployment increased in the North East and North West (where it increased by 0.5 and 0.1 percentage points respectively on the previous quarter).
  •     The biggest decreases in unemployment were experienced in the West Midlands (where the rate fell by 0.7 percentage points on the previous quarter and 18,000 people) and London (by 0.5 percentage points and 20,000 people).  However, unemployment rates remain above the national average in both these regions, at 8.4% and 9.7% respectively.
  •         In the East Midlands, unemployment fell by 1,000 individuals (or 0.2 percentage points), and remains below the national average at 8%.  The employment rate in the East Midlands increased by 1 percentage point, or 28,000 individuals, and remains higher than the national average at 71.9%.
Local Developments
·      In Nottingham City, claimant count unemployment decreased by 187 between April and May 2012, to 14,327 individuals (6.5% of working age residents).  However, the number of claimants in the city is 1,265 higher than in May 2011.  In Nottinghamshire County, the number of claimants also fell by 356, to 17,356 individuals (3.5% of working age residents).  Again, the level for May 2012 is significantly higher than the same month a year earlier (1,629 more individuals compared to May 2011).

[1] According to the International Labour Organisation (ILO), this is defined as those who are out of work but available for, and actively looking for, employment within a set period.  This is expressed as the proportion of ‘economically active’ (employed plus unemployed) adults.