UK suffers longest fall in employment since the pandemic

Economy shed 82,000 jobs in June to August after a 133,000 drop in the period from May through July

A job centre in east London. The labour market may be slightly tighter than previous ONS data had suggested. AFP
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The UK economy lost jobs again in the three months to August, marking the worst stretch since early 2021.

Employment fell 82,000 in June to August after a 133,000 drop in the period from May through July, the Office for National Statistics said Tuesday.

That marked the longest fall in employment since the depths of the pandemic and a sign that inflationary pressures may be abating.

The ONS changed the way it calculated the figures released on Tuesday after already delaying the unemployment and employment figures “to produce the best possible estimates”.

The new calculations indicate that the labour market may be slightly tighter than the ONS’s previous data had suggested.

The revised 133,000 fall in employment in May to July under the new methodology was smaller than the 207,000 drop under the old estimates.

The broader unemployment rate remained unchanged, holding steady at 4.2 per cent during the quarter, the Office for National Statistics said on Tuesday, citing a new adjusted estimate.

Under a previous set of data the unemployment had risen slightly to 4.3 per cent for the quarter.

The updated figure included new data sources to help compensate for a falling response rate to the ONS's Labour Force Survey of households, which usually forms the basis of Britain's job market statistics.

Darren Morgan, ONS director of economic statistics, said: “Today we have produced a new metric, produced by adjusting our headline survey estimates using robust administrative data sources that we receive from other government departments. This maintains the accuracy of our key statistics.

“This is part of our transformation of the way we measure the labour market where we are introducing an improved Labour Force Survey, asking more people in different ways about their employment status.”

The pound edged up against the dollar after the release. It traded 0.2 per cent stronger at $1.2277, rising for a fourth straight day to touch an almost two-week high.

The broader picture shows the labour market is loosening, reducing the upward pressure on wages that concerned the Bank of England.

The central bank in September halted a string of aggressive interest-rate increases designed to cool the economy and expects unemployment will rise as a result.

Official figures last week revealed that real earnings are outstripping inflation for the first time in nearly two years.

But the picture is more mixed for the wider jobs market, with figures last week showing pay growth starting to ease back for the first time since January, job vacancies falling for the 15th time in a row and an 11,000 drop in UK workers on payrolls during September.

Secretary of State for Work and Pensions Mel Stride said: “There are more than one million more people on company payrolls compared to 2019, a near record high, and today's statistics also show inactivity has fallen by over a quarter of a million since the pandemic peak.

“Growing the economy is our priority. That's why we are bearing down on inflation and bringing in the next generation of welfare reforms to drive down inactivity and help more people into work.”

Financial markets showed little immediate reaction to the news which followed other signs of a cooling labour market.

The Bank of England is monitoring Britain's labour market closely as it considers whether it needs to resume raising interest rates, having opted to keep them on hold in September after 14 hikes in a row.

Updated: October 24, 2023, 8:16 AM