The unemployment rate was unchanged in the three months to October, but the UK labour market has clearly lost momentum in recent months.
Manufacturing employment declined in the third quarter of this year. The fall was fairly broad based across UK regions.
UK labour market losing momentum
The unemployment rate was unchanged at 4.8% in the three months to October, its lowest level since September 2005. Yet the apparent resilience in the labour market is to be attributed to the fall in the economically active population, which decreased by 76,000 people compared to the previous three months. Conversely, employment growth was trapped into negative territory for two consecutive months, falling by 38,000 in October after a 12,000 drop in September.
Manufacturing workforce declined in the months to September
Reversing the trend reported so far this year, manufacturers’ recruitment of new employees squeezed in the three months to September. Manufacturing employment dropped by 25 thousand in the third quarter of 2016, offsetting some of the positive growth seen in the first half of the year. This confirms companies’ expectations highlighted in our 2016q3 Manufacturing Outlook, where recruitment intentions turned negative with rubber and plastics and non-metallic minerals explaining most of the decline. Yet this trend is likely to be short lived. Indeed, improving order books and strengthening confidence about the UK outlook will prompt manufacturers to expand workforce in order to meet the boost in demand, as highlighted in our 2016q4 Manufacturing Outlook.
The drop in manufacturing jobs was rather broad-based across UK regions in the third quarter. By contrast to the national trend, manufacturing employment recorded strong gains in the South West, continuing the trend seen previously this year. The dominant transport industry in this region is likely to explain the sustained momentum.