Recent data shows significant changes in the UK labor market, including estimates of employment, unemployment and economic inactivity.
Recent employment data
The estimated number of registered employees in the UK fell by 35,000 (0.1%) between July and August 2024. However, the market saw an increase of 165,000 (0.5%) between August 2023 and August 2024, indicating a year-on-year improvement in employment.
During June to August 2024, the number of employees registered with companies rose by around 3,000 (0.0%) during the quarter, and by around 203,000 (0.7%) over the year. These figures reflect the market’s dynamism and positive trends despite the challenges.
September 2024 estimates
In September 2024, the initial estimate of the number of employees on the payroll decreased by 15,000 (0.0%) month-on-month. However, the market saw an increase of 113,000 employees (0.4%) year-on-year, bringing the total number of employees to 30.3 million. It is important to treat the September 2024 estimates as provisional figures, as they are expected to be revised when additional data is received next month.
Labor Market Volatility
The increased volatility in the Labor Force Survey estimates suggests that these data should be treated with caution, due to the smaller sample sizes. It is advisable to use these estimates as part of a set of labor market indicators, in conjunction with labor force employment data, claimant counts, and real-time estimates of pay-as-you-go information.
Challenges and Opportunities
Despite the year-on-year increases in the number of employees, challenges remain. The decline in monthly estimates reflects the need to monitor trends carefully. The overall improvement in employment can also have positive effects on the economy, such as increased spending and consumption. It is important for companies and investors to remain aware of potential changes in the labor market, as these changes can impact their future strategies.
UK Employment and Unemployment Rates Improve Significantly
In the period from June to August 2024, the employment rate in the UK for people aged 16 to 64 was around 75.0%. This is higher than last year, reflecting a significant improvement in the labor market. The unemployment rate also fell, reaching 4.0% during the same period. This decline is evidence of improved economic conditions compared to last year.
On the other hand, the economic inactivity rate for people in the same age group fell to 21.8%. This decline reflects an improvement in labor force participation in the UK economy. Despite these positive indicators, the number of people claiming social benefits rose in September 2024, reaching 1.797 million, up on a monthly and annual basis.
From May 2024, the Department for Work and Pensions will increase the administrative earnings threshold linked to the job-seeking requirement. The change will affect around 180,000 claimants over the next six months, potentially increasing their numbers during that period. This policy shift may drive significant changes in the labor market, as it aims to enhance how individuals respond to available opportunities.
Despite the challenges, current data remains encouraging and reflects the ability of the UK economy to recover and adapt. Therefore, while we see positive signs in employment and unemployment, close monitoring of the labor market remains essential. The effects of new policies will become clearer in the coming months, particularly in relation to the balance between jobs and unemployment.
The UK labor market remains in a state of flux, with fluctuations in employment and unemployment. It is essential to monitor these trends carefully to ensure an effective response from all stakeholders. Current data is an important reference for understanding the challenges and opportunities in the labor market, which will help to improve future economic decisions.
UK job vacancies fall, economic growth impact
The UK has recorded a fall in the estimated number of job vacancies, falling by 34,000 to 841,000 in the period July to September 2024. This represents the 27th consecutive quarterly decline, although vacancy levels remain higher than before the coronavirus pandemic.
In other news, the annual growth in the average regular earnings of employees in Great Britain was 4.9% in the period June to August 2024. While the growth in total earnings, including bonuses, was 3.8%. This growth is attributed to exceptional payments made by the NHS and the civil service in the previous three months. Looking at inflation-adjusted figures, the annual growth in regular wages was 1.9%, while total wages were 0.9% in the same period. This suggests that the purchasing power of employees has improved, but at a slower pace than nominal growth rates.
In addition, industrial disputes caused the loss of approximately 31,000 working days in August 2024, highlighting the growing challenges in the UK labor market. As the UK continues to face these economic challenges, the outlook for jobs and wages remains under scrutiny as officials seek to stabilize the market.
Trends and considerations for comparisons in employment data
Year-on-year growth rates for selected employment indicators. These growth rates provide a more stable and longer-term view of market changes. The Labor Force Survey is based on household data, while the WFJ is based primarily on business surveys. The Labor Force Survey also includes jobs held by the self-employed. Income tax data is drawn from administrative tax records, and focuses on salaried employees only. It is important to note that each of these sources collects and processes data in different ways, leading to differences in levels.
Consistency challenges in employment data
As has been noted in recent months, we face ongoing challenges in assessing consistency across different statistics. For the available data sets, annual growth ranges from 0.7% for salaried employees to 1.2% for labor force employees. While these figures are relatively consistent at this point in time, observation over a longer period reveals divergent trends in growth rates. Over the past year, we have seen a continued slowdown in annual growth across all three sources. However, the last two periods have seen an acceleration in positive growth in the Labor Force Survey (LFS) employment measures, with the number of LFS employees growing by 1.2% in June-August 2024, compared with 0.4% in July-September 2023.
While growth in the WFJ and RTI measures has continued to slow, with growth in employees on the payroll according to the RTI measure falling from 1.8% a year ago to 0.7% in June-August 2024. The longer-term consistency between the Global Employment Index and the Local Employment Index suggests that these sources provide a more reliable reading on employment, particularly for employees. Despite the challenges, the LFS remains the only source of data on unemployment, inactivity and the self-employed.
