It’s Budget day in the UK so less focus than usual on the latest official labour market numbers published earlier this morning by the Office for National Statistics (mostly covering the three months to January 2016). Good news on jobs will doubtless get at least a passing reference from Chancellor George Osborne in his statement to the House of Commons, helping to offset what’s likely to be somewhat less upbeat news from the Office for Budget Responsibility on the overall economic and fiscal outlook. However, the Chancellor would be advised to highlight the general trend of the jobs market over the past year rather than dwell on the most recent figures.
While the UK labour market remains healthy the pace of the jobs recovery has slowed a little with both the latest rise in employment (up 116,000) and the fall in unemployment (down 28,000) smaller than in recent quarters. Moreover, the number of job vacancies has also dipped slightly (down 10,000 to 768,000 in the three months to February 2016) and although the rate of growth of regular average weekly earnings has picked up from 2% to 2.2% in nominal terms real average weekly earnings growth is little changed at 2% (up from 1.9%). Taken together these figures could indicate that employers are becoming more cautious over hiring decisions as they approach what will be a ‘quarter of uncertainty’ for the economy, including the introduction of the National Living Wage at the start of April and the EU referendum toward the end of June.