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A Resilient Labour Market

Published 07/17/2013, 07:16 AM
Updated 03/09/2019, 08:30 AM
The labour market showed few signs of improvement between February and May. The unemployment rate fell (at 7.8%), and employment was up by 16,000 in the quarter and unemployment decreased by 57,000 (to 2.505 millions).

The number of unemployed, as measured by ILO, decreased by 57,000 quarter-on-quarter (to 2.505 millions), and the unemployment rate fell in the three months to May compared to the three previous months (at 7.8%). Moreover, in June, the level of the UK claimant count (people receiving JSA (Jobseeker’s Allowance)) recorded its largest decrease since June 2010 (21,200). The number of people claiming JSA (1.478 millions in June), which is around a million lower than the number of unemployed people as measured by ILO, thus reached its lowest level since March 2011. These decreases were partly due to a fall in activity rate (at 75.8%, after 77.8%).

However the labour market showed few signs of improvement in the three months through May. Year-on-year, the pace of increase of employment slowed (+1.5% y/y, after +1.1% y/y), but employment was up by 16,000 quarter-on-quarter (against 24,000 in the three months to April).

Households’ disposable income remained dampened by the slow increase in regular pay growth excluding bonuses (+1% y/y in the quarter, after +0.9% y/y). With inflation, at 2.9% in June (after 2.7% in May), households’ purchasing power is thus still decreasing. However all in all, these data suggest that the labour market conditions remain resilient.

The euro zone crisis, uncertainty about the global economic conditions and the fiscal government’s squeeze should still weigh on the economy. However data and surveys suggest that GDP, which rose by 0.3% q/q in Q1 2013 (after -0.2% q/q in Q4 2012) should record a further, even if limited, increase in Q2. Employment should rise with a lag with an increase in output. It is especially true given that that productivity sharply fell in the past months, but the increase in GDP, even weak, should underpin employment in the coming months.

BY Catherine STEPHAN

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