The latest data from the Labour Force Survey, now including the most recent population information, reveals a mixed picture of the UK labour market. While there has been a rise in payrolled employees and strong nominal earnings growth, there are concerns over slowing employment growth and increased economic inactivity, particularly among those reporting long-term sickness.
According to the reintroduction of the Labour Force Survey data, growth in employment has slowed over the past year. The proportion of economically inactive individuals has increased, with a significant number reporting long-term sickness, reaching historically high levels.
Payrolled employees in the UK saw a modest increase of 31,000 (0.1%) between November and December 2023 and a larger rise of 401,000 (1.3%) between December 2022 and December 2023. However, the rate of annual growth is declining, indicating a potential slowdown in employment expansion.
The early estimate of payrolled employees for January 2024 rose by 48,000 (0.2%) compared to the previous month and by 413,000 (1.4%) compared to January 2023. Nevertheless, this estimate is provisional and subject to revision as more data becomes available next month.
Despite these figures, caution is advised when interpreting Labour Force Survey estimates due to increased volatility resulting from smaller sample sizes. These estimates should be considered alongside other labour market indicators such as workforce jobs and claimant count data.
The rate of annual growth is declining, indicating a potential slowdown in employment expansion.
The UK employment level for individuals aged 16 and over has increased both annually and quarterly. However, the employment rate for those aged 16 to 64 (75.0%) remains below estimates from a year ago, although it has increased in the latest quarter. The unemployment rate for individuals aged 16 and over (3.8%) has decreased in the latest quarter, returning to the rate seen a year ago.
The economic inactivity rate for those aged 16 to 64 (21.9%) was largely unchanged in the latest quarter but is higher than estimates from a year ago. The increase was primarily driven by individuals inactive due to long-term sickness, which remains at historically high levels.
The claimant count for January 2024 increased by 14,100 compared to the previous month and by 61,200 compared to January 2023, reaching 1.579 million.
Vacancies in the UK fell by 26,000 on the quarter to 932,000 between November 2023 and January 2024. Although vacancies have fallen for the 19th consecutive period, they are still above pre-pandemic levels. However, the rate of decline has slowed, with the smallest fall in vacancies since May to July 2022.
Nominal earnings growth remains strong, albeit slightly easing in recent periods. Annual growth in total earnings (including bonuses) was 5.8% in October to December 2023, while annual growth in average regular earnings (excluding bonuses) was 6.2%.
Real pay growth persists as inflation continues to decrease. Annual growth in real terms for total pay rose by 1.4% in October to December 2023, and for regular pay rose by 1.8%.
In December 2023, 108,000 working days were lost across the UK due to labour disputes
In December 2023, 108,000 working days were lost across the UK due to labour disputes, with the health and social work industry experiencing the highest number of working days lost.
Overall, the latest labour market data presents a nuanced picture, reflecting both positive and concerning trends amid ongoing economic shifts and uncertainties.
Ken Brotherston, CEO at TALiNT Partners commented: “Another mixed set of employment numbers continues to suggest an economy in transition. As inflation falls and interest rates flatten, it is clearly good news that earnings growth is relatively strong and unemployment remains low. However, the levels of inactivity, especially for young people continues to be a real source of concern. This is not just government’s responsibility. Employers have a crucial role to play in widening the funnel of ways into employment. Encouragingly, many of them seem to have grasped this and are making good progress but it is an area that needs continual focus and support.”