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Unemployment rate remains low at 3.8%

The ONS has released its labour market overview for September 2019, covering the three months from May to July 2019.


The UK employment rate was estimated at 76.1%; this is the joint-highest on record since comparable records began in 1971, and higher than a year earlier (75.5%).


Estimates for May to July 2019 show 32.78 million people aged 16 years and over in employment, 369,000 more than for a year earlier. This annual increase has mainly been driven by more women in employment (up 284,000 on the year to reach 15.52 million). Male employment also showed an increase of 86,000 on the year to reach 17.26 million; this increase was driven by those who were self-employed.


The UK unemployment rate was estimated at 3.8%; this is lower than a year earlier (4.0%) and unchanged on the quarter.


For May to July 2019, an estimated 1.29 million people were unemployed, 64,000 fewer than a year earlier and 716,000 fewer than five years earlier. 


The UK economic inactivity rate was estimated at 20.8%; this is lower than a year earlier (21.2%) and unchanged on the quarter.


Estimates for May to July 2019 showed 8.59 million people aged from 16 to 64 years not in the labour force (economically inactive). This was 171,000 fewer than a year earlier and 487,000 fewer than five years earlier.


Estimated annual growth in average weekly earnings for employees in Great Britain increased to 4.0% for total pay (including bonuses), and fell to 3.8% for regular pay (excluding bonuses).


In real terms (after adjusting for inflation), annual growth in total pay is estimated to be 2.1% and annual growth in regular pay is estimated to be 1.9%.


Tom Hadley, director of policy and campaigns at the Recruitment & Employment Confederation, commented, “The UK’s labour market has been a key part of our economic success, and as today’s figures show, it remains in a strong position with a joint-record high rate of employment. But we cannot take this for granted. Business confidence is low, vacancy numbers are down and our own data shows that the continued uncertainty is starting to have an effect on placements. The government must rule out a no-deal Brexit and help businesses carry on creating jobs and opportunity for people all over the UK.


“It was good to see the expansion of the Shortage Occupation, meaning businesses will find it easier to hire some skilled personnel from abroad. However, government must also acknowledge that we need lower-skilled and lower-paid workers to secure the UK’s future prosperity – not just the brightest and the best.”


Pawel Adrjan, UK economist at Indeed, commented, “The labour market is finally running out of headroom. With Britain’s jobs boom slipping into the rear view mirror, the number of new jobs being created has slowed substantially; just 31,000 over the past quarter, a number so small it is within the statistical margin of error.


“But this is not yet a decline - more a pause for breath. Both the employment and the unemployment rates are holding steady, which is a significant achievement against the backdrop of a stagnant economy and risk-averse employers who are growing increasingly reluctant to hire.


“While there are still 812,000 jobs available, the total number of vacancies has been falling steadily since January, as employers - particularly small businesses - fret about the economic outlook.


“So while it’s ‘steady as she goes’ on the jobs numbers, workers are reaping the dividends in their paypackets. Average wages rose by a relatively brisk 3.8% over the past year, driving inflation-adjusted salaries back up to within just a few Pounds of their pre-crisis peak.


“The steady rises in wages are a side-effect of the tightness in the labour market - as recruiters ramp up salaries in an effort to lure new recruits and retain existing staff.


“On the recruitment front line, that battle for talent is still raging. And with the economy clearly hovering at the full employment mark, wage inflation is likely to continue - unless and until a recession takes the wind out of employers’ desire to hire.”


John Westwood, group managing director of Blacktower Financial Management, said, "Todays (sic) labour market update has reported an increase in UK employment with 32.78 million now employed compared to 31,000 million three months ago. UK employment is now the highest it has ever been, which will be welcomed news throughout the country. This better than expected result, combined with yesterdays surprising GDP update stands the UK in good stead as we get ready to depart the EU. If the UK departs the EU on the 31st October with no deal, the impact to businesses is largely unknown, however their continuation to recruit may mean that businesses are not as frightened as some may have you think."



Nicola Inge, employment and skills campaign director at Business in the Community, shared, “This latest jobs report is bittersweet. While the number of new jobs being created has slowed, the UK employment rate remains at a record high, which could prove useful given that we are on the cusp of one of the most seismic politico-economic developments for decades. It’s encouraging that wage growth has also now picked up, as for a number of years it was stagnant.


“Earnings may be down in real terms compared to 2008, but pay growth is moving in the right direction. Wage growth creates confidence and confidence could be key in helping the UK economy survive during the months ahead. At a time when a lot of employees in all sectors may be anxious about the future, we’re urging employers to communicate regularly with their staff. The UK jobs market may be robust on the surface but there is a lot of anxiety across the workforce and employers need to manage that carefully.”


Jon Boys, economist at the CIPD, said, “It’s good news all round with pay continuing to grow and employment remaining at a record high. Although just shy of the pre-crash peak, pay continues to outstrip inflation putting more money in people’s pockets. 


“However, this strong pay growth is largely being driven by labour shortages in sectors like construction. For this to continue in the long-term, businesses must improve their productivity. It’s also essential that they look at how they recruit, manage and develop their workforce given our uncertain political climate right now.”  


Julia Kermode, chief executive of The Freelancer & Contractor Services Association (FCSA), said, “With official vacancy numbers tumbling by 3.9% this month, this again demonstrates the current uncertainty brought about by Brexit as employers are not sufficiently confident in the future to be able to recruit for staff. And, with temporary employment also down (by 6.7% or 106k) it is clear that employers are not even turning to temps to get them through. In contrast, self-employment is up year on year by 2.6% (125k) as businesses turn to the flexibility of self-employed people for help. Once again, it is the self-employed who are propping up UK business in a time of economic uncertainty and the Government should acknowledge their worth not inflict more punitive measures and legislation on this group of workers.”


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