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Labour market data - August 2023

ended 15. August 2023

The latest jobs data is just out. Key points below. Any thoughts on what this says about the jobs market and general health of the economy, and how it could impact the next interest rate decision, send them across ASAP as this story is BREAKING.

  • The unemployment rate for April to June 2023 increased by 0.3 percentage points on the quarter to 4.2%. The increase in unemployment was driven by people unemployed for up to 6 months.
  • Annual growth in regular pay (excluding bonuses) was 7.8% in April to June 2023, this is the highest regular annual growth rate we have seen since comparable records began in 2001. Annual growth in employees’ average total pay (including bonuses) was 8.2%; this total growth rate is affected by the NHS one-off bonus payments made in June 2023. In real terms (adjusted for inflation using Consumer Prices Index including owner occupier's housing costs (CPIH)), annual growth for total and regular pay rose on the year, by 0.5% for total pay, and by 0.1% for regular pay.
  • The UK employment rate was estimated at 75.7% in April to June 2023, 0.1 percentage points lower than January to March 2023. The quarterly decrease in employment was driven by full-time employees and self-employed workers.
  • The estimate of payrolled employees for July 2023 shows a monthly increase, up 97,000 on the revised June 2023 figure, to 30.2 million. The July 2023 estimate should be treated as a provisional estimate and is likely to be revised when more data are received next month.
  • The economic inactivity rate decreased by 0.1 percentage points on the quarter, to 20.9% in April to June 2023. The decrease in economic inactivity during the latest quarter was largely driven by those inactive because they are looking after family or home. Meanwhile, those inactive because of long-term sickness increased to a record high.
  • Flows estimates show that, between January to March 2023 and April to June 2023, there was a large net movement from economic inactivity into unemployment.
  • In May to July 2023, the estimated number of vacancies fell by 66,000 on the quarter to 1,020,000. Vacancies fell on the quarter for the 13th consecutive period.
  • There were 160,000 working days lost because of labour disputes in June 2023. Over half of the days lost because of labour disputes in June 2023 were in the Health and Social Work sector.

5 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
This is a mixed bag and a headache for the Bank of England. On the one hand, you have employment rates reducing by 0.1% and the unemployment count increasing by 0.3%. On the other, you have the number of payrolled employees spiking by 97,000 and total pay increasing by 8.2% year on year. This means the inflation data tomorrow will be pivotal and that is set to fall sharply. If it decreases by more than 1%, there’s hope the Bank of England may consider the wider effects of its policy and pause rates until the data evolves.
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Editor
Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Wage growth is the biggest concern here. Ultimately this leads to higher prices overall with the cost being passed to the consumer, stoking inflation further. Unemployment rising is potentially good news for the inflation situation. Less money sloshing around the economy means less spending, less demand and slowing down price growth for consumer goods. With the job vacancies rate dropping, and unemployment rising, it seems like we are starting to head towards the "break it to make it point". As unemployment rises, and vacancies reduce, wage inflation will slow right down.
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Riz Malik
Independent Financial Adviser at R3 Wealth
This data is like that one takeaway that ruined your diet and not the news we wanted to wake up to this morning. The markets are now pricing in a higher peak for the base rate base rate which could undo the positive rollbacks seen in the mortgage market. All eyes on the inflation data to calm the markets. If that isn’t positive we could be back in west west territory.
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John Choong
Senior Equity Research Analyst at Investing Reviews
June's significantly stronger-than-expected wage growth numbers will delight Britons as pay finally catches up to inflation. However, the market won't share the same sentiment. The widespread optimism of a lower terminal rate is now in jeopardy after four weeks of smooth sailing. Gilt yields had plummeted and mortgage lenders were battling for market position by cutting fixed rates en masse, but all that is now at risk of getting undermined. Nonetheless, bleak as it may be, the unemployment rate rising to 4.2% along with a drop-off in vacancies may be the very thing that stops the Bank of England from hiking rates by 50bps at its next meeting. It's also worth noting that these latest wage growth numbers are from June. If tomorrow's CPI inflation print for July comes in cooler than expected, it would supersede today's figures. As such, the market will hold its breath and hope that today will just be a bump on the road rather than time to buckle up for another rough ride.
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Mark Grant
Business Finance Adviser at The Business Finance Branch
Today's unemployment, pay and economic activity data are a good representation of the complicated economic picture in the UK currently. A rise in the unemployment and long-term sickness rates was countered by a drop in the economic inactivity rate. Record pay growth, at levels still outstripping current inflation, combined with a forecast 'blip' of higher inflation in September, will knock business confidence that there may be a pause in interest rate rises. Six months of people flowing from economic inactivity to employment as the cost of living crisis hit is countered by a 6% fall in vacancies as the economy reflects increases in prices and interest rates, a 13th consecutive fall in available jobs. This is not data that is shining a light on a clear path forward.