a post by Stephen Clarke for the Resolution Foundation blog
The UK labour market has shifted into different gears over the last decade. The first – and most dramatic – move happened early in 2009 when real pay began to fall for the first time in decades. Early in 2012 the jobs market bottomed out and five years of nearly uninterrupted employment growth began. 2015 saw real growth pick up for the first time in half a decade, while 2017 saw the return of the pay squeeze. Are we seeing the beginnings of another such shift?
Predicting such shifts are hard. To do so one must pick through a plethora of indicators and decide what (to borrow Nate Silver’s dichotomy) is signal and what is noise. Today’s labour market statistics offered up a bit of both.
First the noise. Employment increased by around 100,000 meaning that the country returned to its record high employment rate. On the face of it this may suggest that expectations of a slowdown in jobs growth are wrong. However a look at the single month employment figures suggest it may be too soon to dismiss the idea that employment has plateaued. The chart below compares how the headline rate and the single month rate change month-to-month. Two things stand out. The first is that the monthly figure varies a lot more. The second is that the variation in the monthly figure has increased over the past year. Strip away this noise and the monthly rate could revert to the mean next month, bringing the headline rate back down again.
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Some very interesting graphical representations which will help the non-statistician to understand where at least one expert thinks the UK labour market is going.
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