According to official data, the UK’s jobs market revealed a better than expected increase from September 2019 to November 2019, which diminishes some of the pressure on executives and policymakers at the Bank of England warranting a potential interest rate cut, especially as a meeting is scheduled for early next week. This could be a hot topic during the discussions.
In the three months leading to November, employment rates soared by 208,000 which is almost twice the 110,000 figure that economists had expected. The strong performance by Britain’s jobs market means that the number of people in work has reached just under 33 million.
The huge spike in the labour market was mainly down to a jump in the number of women joining the employment list. Last year over 80,000 women joined the jobs market making up roughly 25 percent of the yearly increase.
The Office for National Statistics outlines the following statistics for the three months of September to November 2019:
- ‘The UK employment rate was estimated at a record high of 76.3%, 0.6 percentage points higher than a year earlier and 0.5 percentage points up on the previous quarter.’
- ‘The UK unemployment rate was estimated at 3.8%, 0.2 percentage points lower than a year earlier but largely unchanged on the previous quarter.’
- ‘The UK economic inactivity rate was estimated at a record low of 20.6%, 0.4 percentage points lower than the previous year and the previous quarter.’
- ‘Estimated annual growth in average weekly earnings for employees in Great Britain remained unchanged at 3.2% for total pay (including bonuses) and slowed to 3.4% from 3.5% for regular pay (excluding bonuses); the annual growth in total pay was weakened by unusually high bonus payments paid in October 2018 compared with more typical average bonus payments paid in October 2019.’
- ‘In real terms (after adjusting for inflation), annual growth in total pay is estimated to be 1.6%, and annual growth in regular pay is estimated to be 1.8%.’
- ‘There were an estimated 805,000 vacancies in the UK for October to December 2019; this is 11,000 fewer than the previous quarter and 49,000 fewer than a year earlier.’
Last year data appeared to show a struggling labour market which spurred two of the Bank of England’s policymakers to vote for an interest rate cut. A further three members of the Bank’s committee, as well as Mark Carney, the Governor of the BoE, said that if economic growth continues to falter it could prompt a further rate cut. The decision is set to be disclosed on January 30th.
Wages stood still at 3.2 percent, the same as the last period but lower than the 3.9 percent that was recorded in the three months to July 2019, marking the highest level for just over a decade, during the 2008 financial crisis that saw the collapse of the US’s biggest investment bank, Lehman Brothers, triggering an unparalleled economic downturn that engulfed the world’s financial system. Global stock markets stumbled as the severity of the problem came to light. In Britain three banks were thrown a lifeline in the form of taxpayers’ money to keep them afloat.
On the subject of earnings, the Office for National Statistics published the following statistics:
‘The rate of pay growth trended upwards from spring 2017, reaching 3.9% in May to July 2019, the highest nominal pay growth rate since 2008. However, in September to November 2019, growth dropped to 3.2% for total pay and 3.4% for regular pay. The growth in total pay is impacted downwards by unusually high bonuses having been paid in October 2018, whereas those in October 2019 are at more typical levels.’
‘In real terms, annual pay growth has been positive since December 2017 to February 2018 and is now 1.6% for total pay (compared with 1.5% last month) and 1.8% for regular pay (unchanged from last month).’
Click here to read the full report by the ONS.
A dependence on the self-employed to support jobs growth also weakened. But, with a rise in self-employment rates during last year of more than 140,000, making the total number of self-employed people to approximately 5 million and just over 15 percent of the entire British workforce. The number of available jobs also dropped by 11,000.
Economists at JP Morgan Asset Management have suggested that the rise in employment that has driven the UK’s jobs market upwards is likely to be sufficient to discourage members of the Bank of England’s policy committee from increasing interest rates.
Yesterday’s data from the jobs market, which highlighted a stagnant pay growth and real wages still struggling, Frances O’Grady, the TUC General Secretary, said:
“The long-promised return to healthy pay growth still hasn’t happened and working families are being forced into the red to get by.”
“No more excuses: the government needs a plan to boost workers’ pay and living standards.”
“These latest figures could hardly be better in terms of the strength of employment growth and the quality of jobs, with permanent, full-time employment accounting for nearly all of the employment growth.”
“The big winners to emerge have been women aged between 25-34, whose numbers in the workforce have swelled by 85,000 over the past year, which represents around a quarter of the annual increase. This suggests that the government’s enhanced childcare offering may be working in tandem with the tightening labour market, which is nudging more employers to offer flexible working arrangements.”
“And in contrast to much of the past decade, this good news is accompanied by relatively strong real earnings growth which will help offset the January blues for many workers.”