ONS published its monthly labour market statistics this morning, we take a look back at labour market trends in the past year.
Overall labour market
Improvements in employment have continued
In fact, the employment rate has continued to push at previous records and currently stands at 73.9%. The previous high was 72.8% in 1990.
There are some signs that the pace of improvements has slackened
As labour market conditions are normalising, the improvement on some indicators has stalled, for example, the claimant count rate has been stable since March. However, although the ILO unemployment rate edged up between February and March, since then it has continued to fall.
Real pay growth has been stronger in general this year
Partly this was a result of low inflation – CPI has bumped along the bottom this year – but also nominal pay growth ticked up. Despite a bit of a drop back in this month’s data, nominal pay grow has averaged about 2.6% this year, compared with 1.2% the year before.
Employment growth has been on a weakening trend
Over the last couple of years we saw the longest run of quarterly manufacturing jobs growth since the late nineties. However, today’s labour market statistics show that the number of jobs in the sector dipped in Q2 and Q3.
Our survey shows that employment balances have now turned negative
Our Manufacturing Outlook survey out last week showed that a balance of 7% of manufacturers had seen employment fall in the past three months. This was the first negative balance since 2010 Q1.
Manufacturing pay drops behind the whole economy in 2015
Although pay growth in manufacturing has remained in positive territory, the pace of growth slowed in 2015. This is consistent with our own settlements data, which showed settlements averaging between 2.2% and 2.7% between 2010 and 2014, this dropped to a band of 1.8% to 2.2% in 2015.
Outlook for 2016 is that there will be a modest fall in employment in 2016
Although we still expect manufacturing employment to rise in 2015 overall – by 0.8% – our current forecasts point to a fall of 1.3% in manufacturing jobs in 2016. This is a relatively modest fall compared with long-term trends for the sector.
What’s driven the difference?
2015 has been a challenging year for manufacturers. One particular issue – that we’ve talked about before on this blog – has been the impact of the fall in the oil price on manufacturers in the oil and gas supply chain (such as mechanical and electrical). Indeed the weakness in the employment balances in our survey is mainly concentrated in sectors focused on the oil and gas supply chains. The well-publicised closures of iron and steel plants have also meant significant reduction in headcount for manufacturers in the metals sectors.