11 October 2022
If you are covering the latest UK labour market statistics, please see the following comment from Paul Craig, portfolio manager at Quilter Investors:
“The UK unemployment rate for June to August 2022 reveals yet another downtick, with a decrease of 0.3 percentage points on the quarter to 3.5% – the lowest rate since December to February 1974 – and the number of unemployed people per vacancy dropped to a record low of 0.9 as a result. While on the surface a low unemployment rate may appear to be a positive, the figures remaining this stubbornly low is actually too much of a good thing as it is creating inflationary pressure in the economy.
“The employment rate for June to August 2022 also fell by 0.3 percentage points compared to the previous quarter to 75.5%, meaning it is now 1.0 percentage points lower than pre-pandemic levels.
“In July to September 2022, the number of job vacancies fell to 1,246,000, a decrease of 46,000 from the previous quarter and the largest quarterly fall since June to August 2020. At present, most indicators continue to show strength in hiring, though we can expect the recent hit to business confidence, sentiment, and the harsh backdrop to begin biting in the coming months. While it may be too soon to start truly seeing this in the data, we are beginning to see a gradual slowdown in the recruitment frenzy seen in recent times and a reduced level of job advertisements as a result.
“Growth in employees' average total pay including bonuses was 6.0%, and growth in regular pay excluding bonuses was 5.4% in June to August 2022. While this is the strongest growth in regular pay seen outside of the pandemic, workers will no doubt feel hard done by given inflation remains so high. Andrew Bailey will still be hoping pay does not rise too quickly, but the cost-of-living crisis already has a firm hold on people’s finances and employers will be looked to for support as we navigate a difficult winter.”
