Labour market outlook: mainly sunny but still some clouds in the sky | EEF

Labour market outlook: mainly sunny but still some clouds in the sky

Subscribe to Campaigning blog feeds


The labour market statistics once again resume their role as a ray of sunshine in the economic calendar, with this morning’s data showing that the labour market has continued to strengthen.

Mainly sunny

While there are a number of economic storms rumbling about in overseas markets, in the UK the labour market continues to look sunny, with good news as the ILO employment rate remains at near-record levels, and the ILO unemployment rate fell to 6.2%, its lowest level since the three months to September 2008. Our forecasts suggest that gradual continued improvement is likely, and unemployment should average 6.0% in 2015.

The positive outlook extends to manufacturing with the data showing that workforce jobs in manufacturing increased by 1.2% in the second quarter. This marks the sixth consecutive quarter of growth, the first time this has happened since 1993-95. Combined with the news that manufacturing vacancies have risen by an impressive 37% over the year this suggests the employment in the sector is on track to meet our forecast of 0.8% growth in 2014.

Still some clouds or showers about

Despite a generally cheery picture, there are some clouds in the sky. Average weekly earnings growth remains subdued. Across the economy as a whole, earnings (excluding bonuses) rose by only 0.7% in the year to July. This compares with the average in the five years before the recession of 3.8%.

While pay rises are likely to remain subdued throughout 2014, our forecasts suggest that whole-economy pay increases will rise above inflation as we move into 2015.

Better weather for manufacturers

The picture in manufacturing is somewhat stronger, with average earnings increasing 1.7%. Our own data shows a similar picture, last month our Pay Bulletin showed that while pay settlements in manufacturing had averaged about 2.4% over the last two years, the most recent data pointed to a slight uptick. The average pay settlement in the six months from February to July came in at 2.6%. Importantly, this includes April, one of the year’s major pay rounds, which is a good indicator for pay this year.

Tomorrow we release the next Pay Bulletin, so check back on the blog for further details.


This person has now left EEF. Please contact us on 0808 168 1874 or email us at if you have any questions.

Other articles from this author >
Online payments are not supported by your browser. Please choose an alternative browser or make payments through the 'Other payment options' on step 3.