UK Employment Figures, May 2018: The UK Labour Market Roars On
The UK labour market returned another strong set of numbers today with employment at a record high rate of 75.6% and unemployment staying low at 4.2%. Productivity in the first quarter declined, however, which is a worrying sign for the future.
A repeat of last month’s exceptionally strong set of labour statistics was a long shot, yet despite weak GDP figures, this is exactly what has happened in the ONS’s latest employment data release.
Years of job creation have brought the UK within touching distance of full employment. Unemployment now stands at its lowest rate since 1975, while the employment rate is now the highest on record at 75.6%. While it’s too early to say if this will be the high water mark, a clear line in the sand has been drawn.
With these kinds of numbers, UK employers are feeling pressure on wages, and we saw regular pay growth outpace inflation for the second month in a row.
It is clear that thousands of employers are still betting on economic growth and are trying to hire. As that demand bumps up against the limited supply of workers, there is a need to offer higher salaries to attract new staff.
Workers will be celebrating two straight months of real gains in regular pay and if inflation continues to fall and the jobs keep on being created – the average person’s paypacket could continue to expand.
A word of caution though. The latest figures show productivity is falling and it bears repeating that the UK’s economic growth has painted a worrying picture. These employment figures are out of sync with the wider picture and something will have to give in the not too distant future.
Pay rises alone cannot deliver lasting benefit to Britain’s economy; the holy grail remains productivity. And improving that remains as elusive as ever.
Tara Sinclair is an associate professor of economics and international affairs at the George Washington University and a senior fellow of the Indeed Hiring Lab. She has a PhD in economics from Washington University in St. Louis and her research focuses on modeling, explaining, and forecasting trends in the labor market and other macroeconomic variables both in the US and worldwide. For the Hiring Lab, Tara is working on research projects using Indeed’s unique data to develop new insights into the labor market.