Record number of Britons in work: what the economists say
The number of Britons in work hit a fresh high in the final three months of 2012, though the pace of wage growth slowed. Here's how economists reacted.
20 February 2013 • 10:07 am
Against a backdrop of sluggish growth, economists have struggled to explain the strength of the labour market. But with the economy on the brink of a triple-dip recession, the employment figures will provide some succour for the Government. Credit: Photo: Rex
Rob Wood, Berenberg Bank
The labour market continues to defy gravity, with employment posting a solid increase in December despite little evidence yet of any real momentum in the economy... This is obviously good news for those people gaining employment. On the other hand, wage growth remains very weak - 1.3 percent year-on-year excluding bonuses - so total earnings aren't rising that fast and with little momentum we don't think this strong employment growth is likely to continue through this year.
Howard Archer, IHS Global Insight
The jobs data are encouraging overall, and a boost for hopes that the economy will return to growth in the first quarter and can then keep expansing. However, ongoing moderate earnings growth is likely to constrain consumer spending. Meanwhile, the ongoing strength of the labour market will further fuel the productivity debate.
We remain sceptical that the labour market can sustain this resilience and think there is a good chance that unemployment will rise moderately later on in 2013. Employment may well rise modestly in the private sector, but we doubt that this will be enough to both offset job cuts in the public sector and combat an increasing labour force. Consequently, we believe that unemployment could trend up gradually to 2.60 million in late-2013/early-2014, giving an unemployment rate of 8.0%.
Samuel Tombs, Capital Economics
Elsewhere, the latest labour market data indicate that the improving trend in employment shows no imminent signs of slowing. Employment rose by 154,000 in the three months to December, while the claimant count measure of unemployment fell by a further 12,500 in January. But the price of this resilience has been extremely weak growth in average earnings. Indeed, the dip in the headline rate of average earnings growth excluding bonuses from 1.4 percent to 1.3 percent in December suggests that real pay is now falling at an annual pace of more than 1 percent.
Iain Duncan Smith, Work and Pensions Secretary
What's really important in the figures today ... is that the long term unemployment has fallen," Duncan Smith told Sky TV. We've got more people in work than ever before, women's unemployment is falling and overall claimant count is falling so in difficult times this is a remarkable set of figures. It's a pat on the back for British industry and the private sector because these are private sector jobs, not public sector jobs.
David Tinsley, BNP Paribas
Against this backdrop of the committee doing this, you've got this storming labour market that is just staggering strong on other hand. It's not just Olympic effects as it's the last quarter of last year, it's genuine strength of some sort, GDP is not rising but nonetheless employment is rising very fast.
The conundrums in the UK are extraordinary, you've got this continued fall in productivity, inflation above target and you've got the MPC wanting to do more rather than less - more questions than answers I'm afraid.
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