The labour market is a crucial indicator of the overall health of an economy, and each month, we analyse various metrics to gauge its performance. The June 2024 Labour Market Report reveals a complex picture of a cooling market, marked by declining vacancies and rising unemployment, despite relatively strong earnings growth. This report delves into the latest figures, offering insights into the trends and considerations necessary for making informed comparisons.
Trends and Considerations Around Comparisons
This month’s figures indicate a potential cooling in the labour market. Key indicators such as the number of vacancies continue to decline, and the unemployment rate is on the rise. However, earnings growth remains relatively strong, creating a nuanced landscape that requires careful analysis.
Short-Term Movements
Short-term movements across various employment measures show mixed results. The Labour Force Survey (LFS) and HMRC’s Real Time Information (RTI) data both report decreases in employment estimates in recent months. Conversely, the quarterly workforce jobs provisional estimate for March 2024 suggests an increase in employment since December 2023. These discrepancies highlight the importance of considering different data points and periods, and emphasize the value of longer-term comparisons for a more stable perspective.
Medium-Term Trends
Dataset X12 provides annual growth rates for these measures, suggesting that the medium-term trend for employment growth is steadily weakening. This highlights a shift in the labour market that may signal further changes in the near future.
Latest Data
Payrolled Employees:
March to April 2024: Decreased by 36,000 (0.1%).
April 2023 to April 2024: Increased by 201,000 (0.7%).
Early Estimate for May 2024: Decreased by 3,000 (0.0%) on the month, but increased by 167,000 (0.6%) on the year, reaching 30.3 million.
These figures suggest that while there is a short-term decline, the annual growth remains positive. The early estimate for May 2024 is provisional and subject to revision.
Labour Force Survey Volatility
Increased volatility in LFS estimates, due to smaller sample sizes, necessitates caution. It’s advisable to use these estimates alongside other indicators such as Workforce Jobs, Claimant Count data, and PAYE RTI estimates for a comprehensive understanding.
Employment Rate
The UK employment rate for people aged 16 to 64 years was estimated at 74.3% for February to April 2024. This is lower than the previous year and has decreased in the latest quarter.
Workforce Jobs
The total Workforce Jobs estimate for March 2024 rose by 431,000 on the year to 37.2 million, with increases in both employee and self-employment jobs.
Unemployment Rate
The UK unemployment rate for people aged 16 and over was estimated at 4.4% for February to April 2024, an increase from the previous year and the last quarter.
Claimant Count
The Claimant Count for May 2024 increased both monthly and annually, reaching 1.629 million.
Economic Inactivity Rate
The economic inactivity rate for people aged 16 to 64 years was estimated at 22.3% for February to April 2024, higher than the previous year and up from the last quarter.
Vacancies
From March to May 2024, the estimated number of vacancies decreased by 12,000 on the quarter to 904,000. This marks the 23rd consecutive period of quarterly decreases, though vacancies remain above pre-pandemic levels.
Earnings
Regular Earnings Growth: 6.0% annually (excluding bonuses).
Total Earnings Growth: 5.9% annually (including bonuses).
Real Terms Growth (Adjusted for CPIH): 2.3% for regular pay, 2.2% for total pay.
Labour Disputes
An estimated 17,000 working days were lost due to labour disputes in April 2024.
Job Market Snapshot: Where Do We Stand?
Despite the recent decline, job vacancies are still above pre-pandemic levels. Earnings growth remains positive, though not as strong as in previous periods. The number of payrolled employees is also healthy, exceeding pre-pandemic figures. However, there’s a downside. The employment rate is falling, and unemployment is rising, both exceeding pre-pandemic levels. Additionally, the economic inactivity rate is on the rise.
Conclusion
The June 2024 Labour Market Report highlights a mixed landscape, with signs of a cooling market evidenced by falling vacancies and rising unemployment, compared against strong earnings growth. Short-term fluctuations and increased volatility necessitate a cautious approach, emphasizing the importance of long-term trends for a more stable analysis. As the labour market continues to evolve, these insights will be crucial for policymakers, businesses, and individuals navigating the shifting economic environment.
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