A raft of data emerged from the Department for the Economy today. The most significant release was the Quarterly Employee Survey (QES) for Q2 2017 -a comprehensive survey of the actual number of jobs in the economy. This is more closely watched than the Labour Force Survey which looks at people working in some shape or form (paid, unpaid, self-employed, voluntary etc).
The latest survey revealed that the jobs market remained buoyant in Q2 with the number of jobs hitting a record high. This was due to the private sector notching up its twelfth consecutive quarter of employment gains (+0.5% q/q and +2.0% y/y). As a result, private sector employment also hit an all-time high. However, it is noted that the annual rate of employment growth has eased from 3.3% in Q2 2016 to 2% in Q2 2017. The latter represents the slowest rate of growth since Q3 2013.
Northern Ireland’s rate of job creation +1.4% y/y is in line with the UK average. However, NI’s performance is less impressive when looking at full-time versus part-time employment growth. While the UK’s employment growth in recent quarters has been driven by full-time employment, NI’s job gains are predominantly part-time. Full-time employment growth in NI has slowed to 0.5% y/y in Q2 2017. This represents the slowest rate of growth in four years and compares unfavourably with the UK (+2.0% y/y). Meanwhile NI’s part-time employment has increased by over 3% y/y – which compares with (0.1% y/y for the UK).
At an industry level, there were strong rates of growth across most sectors. Construction employment rose by over 7% y/y taking the number of jobs to a 6-year high. That said, construction employment is still only three-quarters of what it was a decade ago. Manufacturers have been hiring at a rapid pace too. Despite the high profile job losses in Michelin and JTI, Northern Ireland’s manufacturing employment hit a 9-year high in the last quarter. Meanwhile the services sector saw its staffing levels rise again by 1% y/y to a fresh record high. Although the services sector’s growth is due to a surge in part-time jobs (+3.5% y/y) rather than full-time (-0.6% y/y).
Over the last decade the number of private sector jobs has risen by almost 15% (>69,000 jobs) in just over five years and 10% higher than a decade ago. Conversely, the public sector has been reducing its headcount at a rapid rate. The number of public sector jobs is down over 8% over the last 10 years. Close to three private sector jobs have been created for every public sector job lost.
While the continuation of employment growth into Q2 2017 is encouraging it is clear that challenges remain. Not least productivity and the quality of the jobs being created. It is noted that the private sector recouped all the jobs lost during the downturn back in Q1 2016. However, private sector output still remains around 4% below the corresponding level a decade ago. This highlights that a bigger private sector is producing less output.
Today’s Labour Force Survey also highlighted that economic inactivity continues to rise. Northern Ireland’s inactivity rate in the 3-months to July (27.8%) hit its highest rate since Q3 2015. Meanwhile, the continued decline in the unemployment claimant count (Jobseekers Allowance) is occurring alongside rising take-up of the Employment Support Allowance (ESA). The latter’s upward trend is worrying. It would appear that individuals are simply leaving one benefit register to another.
Looking ahead, the squeeze in living standards (from high rates of inflation) is set to continue into 2018. While there appears to be some relaxation of the public sector pay caps, for most individuals, inflation will still outpace wage growth. Consumer sensitive sectors which have been generating a lot of employment growth in recent years are vulnerable. Furthermore, the next few years will be dominated by BREXTERITY (BREXIT and Austerity). This presents challenges for both the public and private sectors.