“This morning's labour market data shows weakening performance before Christmas, reflecting business trading and cost concerns. That will not come as a surprise to watchers of the business surveys. The real test of this trend is what happens in January and February as firms return to hiring after Christmas, where anecdote from recruiters in the private sector is not as gloomy.
“The underlying issues we have seen in the labour market over the past few years are still clearly visible in today's release - an employment rate below pre-pandemic norms, and higher economic inactivity. But these challenges risk being added to by shorter-term cost concerns, resulting in today's rise in unemployment. At the highest level, this is not a weak jobs market, with unemployment still low by historic standards and vacancies high, but the trend is concerning. What is needed now is the right blend of government policy and business leadership. That is why we are looking to the government for clarity on their growth plans. At the moment firms are mostly seeing cost rises that will push us farther from the 80% employment rate goal. The Industrial Strategy cannot just be about a few projects or a few sectors – it needs to step up on planning, infrastructure, tax and workforce issues to deliver. At the moment, this whole narrative feels a little disjointed.
“Accurate and timely jobs data is central to driving economic strategy. The ONS labour market statistics must deliver a clear snapshot of the labour market. It is good to see the progress that has been made on the Labour Force Survey's recovery, but this effort must be maintained now.”
