The latest labour market statistics from the Office for National Statistics (ONS) shows that 67,000 fewer people in work in the three months to May 2015 compared to the three months to February.
There were however still 30.98 million people in works with this number being 265,000 more than in the same three months a year ago. This was made up of 272,000 more people working full time and 7,000 fewer part timers.
The employment rate of those aged 16 to 64 for the three months to may 2015 was generally unchanged at 73.3 percent compared to the previous three months but was higher than the same period last year (72.9 percent).
The unemployment rate was also generally unchanged from the previous three months ate 5.6 percent, but was lower than last year’s 6.5 percent. But at 22.2 percent the economic inactivity rate was slightly up on the three months to May compared to the same period a year ago.
On the pay front Comparing March to May 2015 with a year earlier, pay for employees in Great Britain increased by 3.2% including bonuses and by 2.8% excluding bonuses said the ONS.
Commenting Neil Carberry, CBI Director for Employment and Skills, said:
“This fall must be seen against the backdrop of strong employment growth since the end of 2013, so it is far too early to draw conclusions.
“Nevertheless, it offers a timely reminder of the importance of Government treading carefully in the labour market and protecting the flexibility that gives Britain a great record on jobs.”
James Sproule, Chief Economist at the Institute of Directors, said:
“Today’s slight increase in the unemployment rate may have surprised economists and spooked policymakers, but there is more good news than bad in these latest figures. Over the last few years, businesses have powered the recovery and created jobs at a record pace. Unemployment is now much lower than many expected, and people are moving from self-employment to full-time jobs at a healthy rate.
“As the economy strengthens, businesses are feeling more confident, and people are shifting into full-time work. For people who could only find part-time work or work for themselves in recent years, this is good news.
“Wages, stagnant for so long in the aftermath of the crisis, appear to have well and truly turned a corner, and real wage growth has naturally accelerated. With labour markets remaining tight, wages look set to continue growing through 2015. The key, however, is to ensure these wage rises are driven by corporate performance and productivity gains.”
IPSE Chief Executive Chris Bryce said:
“Today’s figures show a significant fall in the number of self-employed people working in the UK. This sector is absolutely crucial to the economic success of the UK, and Government should consider ways it can better support people who work for themselves. "The majority of jobs created in recent years came from the self-employed community, and if the Government is to reach its ambition of an extra 2 million people in the labour market by the end of the Parliament, this group has a vital role to play. However, contrary to what is needed, last week’s Summer Budget delivered a number of measures which have potential to restrict growth of the self-employed. We urge the Government to rethink plans which will be detrimental to this important part of the labour market."
TUC General Secretary Frances O’Grady said:
“Rising joblessness is a reminder that the recovery can’t be taken for granted, especially with youth unemployment still so high. While earnings are finally going up, pay rises are lower than before the recession and there is still a long way to go just for families to recover lost living standards.
“If we want a recovery that is built to last for the long-term, we need a better economic plan with more investment in skills, infrastructure and innovation to help job creation and growth.”
Nick Dixon, Investment Director at Aegon UK, commenting on the rise in weekly earnings said:
“The further uptick in wages will be warmly welcomed by consumers after more than 5 years’ sluggish growth. Coupled with the triple alliance of low inflation, muted oil prices, and a strong pound sterling, real wage growth looks set to stay over the medium term. It also spells good news for long term savings, as people pay a proportion of their salary into pensions which will help lift retirement incomes over time.”
Helal Miah, investment research analyst at The Share Centre, explains what this means for investors.
“Today’s unemployment data painted a slightly softer tone regarding the pace of UK economic growth as the unemployment rate rose to 5.6% from 5.5%. The other figure that has been closely followed is the level of wage growth, which also disappointed, rising by 2.8% over the last three months (annualised) vs. the forecast of 2.9%. While these numbers on a stand-alone basis should not be any cause for concern, it will make policy makers think again – raising interest rates too soon could stall the economic recovery. Yesterday’s flat inflation data should also make policy makers less inclined to pull the interest rate trigger too soon despite Mark Carneys comments that interest rate hikes are looming.
Today’s numbers have given UK shares a very mild boost. While we believe that interest rates will rise, it will only be at a very gradual pace provided the economic data warrants it. Therefore, with lacking returns on other assets classes, we believe that equity markets remain the asset class of choice for some time still to come.”