The Office for National Statistics (ONS) has this morning released the latest set of UK labour market data, mostly covering the three months May to July 2014.
Although the UK labour market continues to improve, there are tentative signs in the latest figures that the balance between job creation and pay growth may have started to shift. The increase of 74,000 in the number of people in work (which now totals 30.6 million) is less than half that recorded in the previous quarter and the lowest quarterly increase for a year. Moreover, in contrast with recent quarters almost all the net new jobs (92%) were part-time. Pay meanwhile ticked-up a bit with growth in regular pay (excluding bonuses) rising from 0.6% to 0.7%, the gap between regular pay growth and CPI inflation (the real pay squeeze) narrowing from -1.3% to -0.9%.
Despite the slower pace of job creation, unemployment fell faster than in the previous quarter, in large part because of a sharp, and welcome, fall of 106,000 in youth unemployment. The number of unemployed 16-24 year olds (excluding those in full-time education) is now below half a million (489,000), though the unemployment rate for this group (14.2%) is still more than twice the overall average rate (6.2%, now at a six year low). It therefore appears that the jobless, and especially the young jobless, are doing better in accessing the jobs being created.
The latest labour market data thus add to the quandary facing the Bank of England over when to start to raise interest rates. The unemployment and pay data point to tighter conditions but the jobs data suggest an easing in the pace of the jobs recovery, which might suggest improved prospects for labour productivity. Overall, therefore, these data do not suggest any immediate need for an interest rate rise.