Incoming economic indicators have been hitting record highs and lows of the negative variety. April was the first month of a full lockdown so data linked to this month has been dire. All of the UK regional PMIs posted record lows in April with Northern Ireland the weakest of all. New car sales has been another area showing staggering rates of decline, with the UK and NI posting 97% and 99% year-on-year declines respectively. Last month saw the fewest new car sales since 1946. Comparisons with WWII are coming in thick and fast. Staggering rises, as opposed to falls, are the concern with global unemployment trends. For example, the US unemployment has already hit a post-WWII high of close to 15%. Today we finally got the first meaningful indications of the COVID-19 impact filtering through into the UK and Northern Ireland official labour market data.
The Labour Force Survey (LFS) remains something of an irrelevance given the latest period is for January – March 2020. Nothing to see here…yet! But of more significance is the more timely claimant count figures. The claimant count includes Jobseekers Allowance (JSA) and Universal Credit claims (where the primary reason for benefit was due to unemployment). Both the UK and NI claimant counts surged in April. Northern Ireland’s claimant count posted its biggest monthly increase on record with an 89% rise (+26,500) to 56,200 in April. That takes the claimant count to its highest level in six years with the rate hitting 6.1% which leapfrogs the UK rate of 5.8%. In Northern Ireland, those in the 25-49 years of age bracket saw the sharpest rise with benefit claims doubling in one month. Meanwhile the 16-24 year olds and those over the age of 50 years posted monthly increases of 88% and 60% respectively.
According to the Institute for Employment Studies, which uses Bank of England data on ‘administrative unemployment’ the UK’s claimant unemployment data posted its largest rise since 1947. Only during the deep freeze in January / February 1947 was there a steeper rise in unemployment. April’s monthly rise in the UK claimant count was a staggering 856,500. This takes the total to 2.1 million which is 489k (+30%) above the January 2012 peak following the last recession.
It is worth noting that the reference point for the latest data was the 9th April. So the current position, some five weeks on, is likely to be something in the order of 65-70k for Northern Ireland. Furthermore the previous peak in Northern Ireland’s claimant count of 7.3% ( Dec-12) is likely to be eclipsed in May or June. The pace and scale of the change in the labour market is nothing short of alarming and we are only at the start of the labour market deterioration. Vacancies at a UK level have already collapsed by 80% relative to a year ago. It is a similar picture in Northern Ireland with the younger generation to be impacted hardest from recruitment freezes and job losses. For now, redundancies remain rather tame with just 117 confirmed in April and 783 proposed. The Chancellor’s Job Retention Scheme is clearly limiting job losses. Some 8 million workers ( over 1 in 4 of the UK workforce) are being supported by the scheme. When the scheme ends, or is altered, it is inevitable that a significant proportion of these will turn into redundancies. The hospitality sector is arguably the most exposed. It faces a challenge on two fronts – the collapse in overseas visitor numbers and the start of a new era of working from home. Both of these trends are expected to drastically reduce footfall. It should also be remembered that wages are another labour market pressure point not currently under the spotlight. For those who keep their jobs, escaping with pay freezes as opposed to outright wage cuts will represent a good outcome. Northern Ireland faces its biggest labour market challenge since the 1980s.