The July labour report suggested resilience in the job market post-referendum.
Labour market resilience post-referendum
The labour market showed resilience in the three months to July despite the collapse of business and consumer confidence in the immediate aftermath of the EU referendum.
The number of employed persons increased by 31 thousand people in the three months to July, with the employment rate again reaching a new record high at 74.5%. The unemployment rate printed at 4.9% in the three months to July, unchanged over the past three months. Yet the pace of job creation has been slowing recently, partly reflecting the impact of Brexit-related uncertainties. Looking forward, the number of vacancies grew in the three months to August after a downward trend since the start of the year, suggesting labour market momentum will continue in the short term.
Manufacturing employment up in 2016q2
Today’s labour market report provides employment breakdown by industry for the second quarter of this year. Employment in the manufacturing sector posted positive growth for the third quarter in a row, rising by 13,000 jobs in the three months to June. Moreover, most of employment gains were recorded in the Midlands, suggesting that the rise is likely to be driven by the transport sector as we previously expected.
While the performance of manufacturing employment is in line with the remarkable growth in output reported by the sector for the second quarter, the trend appears quite unusual by historical standards. Indeed, it contrasts with previous episodes where growth in manufacturing output was accompanied by a drop in workforce. This is to be linked with the protracted weakness in productivity.