Falling employment rate spells end to UK jobs boom | UK unemployment and employment statistics

Britain’s long jobs boom appears to have come to an end after official figures showed the number of people in work fell by 56,000 in the three months to October.

The Office for National Statistics said a recovery that started in 2012 and persisted for a year after the vote to leave the EU had run out of steam.

While strong economic growth at the end of 2016 meant a total of 325,000 net jobs had been created in the year to October, the last three months have seen a drop of 56,000 jobs.

The ONS said the employment rate, which was at its highest level this year since modern records began in the early 1970s, fell 0.2 percentage points in the last quarter to 75.1 %.

Unemployment also fell by 26,000 to 1.43 million, but only due to a rise in economic inactivity, a category that counts people who have stopped looking for work. The unemployment rate remained at 4.3%, its lowest since 1975.

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What is the unemployment rate as defined by the ILO?

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The International Labor Organization (ILO) unemployment rate is a measure of unemployment adopted in a number of countries to reflect the state of the labor market. It is expressed in percentage terms, as the proportion of people of working age who are unemployed but who want a job and are actively seeking one.

The ILO rate is used by the Office for National Statistics to measure unemployment in Britain. The precise definition of people who are counted are those unemployed who have actively sought work in the past four weeks and are available to start work within the next two weeks. It also includes those who are unemployed but have found a job and expect to start it within the next two weeks.

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The ONS also reported a slight acceleration in revenue growth, but the 2.3% annual increase in the three months to October was lower than the 2.6% recorded in the same period of 2016 and meant that wages lagged inflation for an eighth month.

Income growth is being watched closely by the Bank of England for signs that reducing unemployment could lead to the start of a wage-price spiral. Threadneedle Street raised interest rates from 0.25% to 0.5% in November, the first increase in the official cost of borrowing in more than a decade and the city expects it to be raised again in 2018, unless there is a clear slowdown in the labor market.

Most city analysts see that prospect as unlikely given the rise in job vacancies from 5,000 to 798,000 in the three months to November – evidence that businesses are facing a skills shortage.

ONS statistician Matt Hughes said: “Employment remained near record highs and, while up a year ago, has fallen from the previous three months. Unemployment also fell, but there was an increase in the number of people who were not working and not looking for work. Meanwhile, the number of vacancies continues to grow, reaching a new high.

“There has been a slight acceleration in wage growth in cash terms, which means that even though incomes are still growing less than inflation, the gap has narrowed.”

The ONS measures earnings including and excluding bonuses, but said real wages fell regardless of which method once inflation was taken into account. Excluding bonuses, real earnings were down 0.4% year-on-year, while including bonuses, they were down 0.2%.

The ONS said there had been a drop of 35,000 over the past year in the number of employees from the eight eastern European countries that joined the EU in 2004, but an increase 82,000 in the number of workers from Bulgaria and Romania, who joined the EU. in 2007.

John Philpott, director of employment consultancy Jobs Economist, said while ONS figures suggested the jobs boom of recent years was coming to an end, it was due to a lack of employable people rather only to a drop in demand from employers.

“Layoffs are still down and unfilled vacancies are at a new high; but the rapid growth in labor supply in recent years has apparently reversed. The main reasons for this are a sudden increase in the number of students and a drop in the number of citizens from Central and Eastern European (A8) countries who joined the EU in 2004,” said Philpott.

“In principle, this drop in the available workforce should be good news for unemployed job seekers. The stable unemployment rate may therefore indicate a lack of employability on the part of the pool of remaining unemployed. Assuming there is no overall weakening in demand for workers or a pick-up in supply growth, the labor market should therefore show greater signs of tightening in the coming months, which which, fingers crossed, should mean somewhat better news on the payroll front.