In Economic Prospects – our mid-year economic review – we lay out where we expect growth in the UK economy will come from in the latter half of 2011.
What do today's labour market statistics add to this picture?
On first look, the headline figures do not suggest there has been much change in the labour market, in line with our expectations that the labour market will remain fairly static over the course of the year. The good news is that employment edged up a little, but the ILO unemployment rate has stayed put at 7.7%.
Yesterday I mentioned would be watching a couple of indicators which may give some more information about the underlying health of the labour market.
The first of these was claimant count outflows. The total number of people claiming Job Seekers' Allowance rose in June, but so too did the number of outflows.This is positive because it points to labour market ‘churn' rather than stagnation. As it is released at the same time as data showing the numbers unemployed fell against the ILO measure (albeit on a slightly different timeframe), it could point to a healthier labour market than the headline claimant count figure suggests.
The second indicator is the number of people in part-time work who would prefer to be in full-time work. Unfortunately this number rose by 6.8% to 1,254,000 in the three months to May. This is the highest number since the series began in 1992. This has implications for domestic demand as more people working fewer hours than they would like could lead to further consumer squeeze.