Reflections on the labour market statistics today put in context of wider trends
Since the pandemic, the local labour market largely became the go to place for positive economic statistics. Employment at record highs and unemployment close to historic lows has been a line regularly trotted out. A cursory glance at these two statistics provides some comfort that the labour market appears to be functioning well.
Last week’s wage growth and inflation figures suggests that while most battles may be won, the war against inflation is not yet over. But with summer coming to an end and momentum in the economy seemingly fading, there is less wiggle room for the Bank of England, and the trade off between growth and price stability is likely to become trickier.
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Good news on the UK economy remains thin on the ground. Economic output is flat-lining, the labour market is cooling, and credit conditions are set to tighten. Nevertheless, the Bank of England remains focused on taming inflation, even if that means higher re-mortgage costs for households. Growth in the second half will be contingent on how aggressively households rein in spending. A drop in energy bills from this month should offer some solace, but the rest is left to be seen.
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After an economic shock, we tend to closely watch whether a particular indicator has returned to its pre-shock levels over the months and years that follow. Since the pandemic occurred economists and commentators have been asking “are we there yet?” Have we returned to pre-pandemic levels? Depending on the frequency of the specific statistic (monthly / quarterly), the benchmark has been pre-March 2020. For quarterly data, Q4 2019 is invariably the timestamp to compare economic progress.
Continue readingTwo weeks in and has the bad news poured in? Well not yet, but there’s plenty to be concerned about. Did the UK end 2022 with a recession? It may have just been averted (not so in NI). But the base case is it has only been delayed. What’s certain is that the cost-of living crisis is far from over, and borrowing costs will rise further before they come down. Businesses and mortgage owners, brace yourselves. The good news is the £600 energy vouchers for local households are in the post. But there’s still a long and bumpy ride left to run.
Despite the upsurge in recessionary chatter, Northern Ireland’s labour market continues to churn out positive headlines. The ILO unemployment rate in the three months to April stood at 2.6%, just north of Q1 2020’s pre-pandemic level (2.5%) and the record low of 2.3% (Sep-Nov 2019). Both the HMRC payrolls data and the Quarterly Employer Survey (QES) posted record employee numbers for May and March 2022 respectively. Meanwhile there is still nothing of note on the redundancy front. From a recession watch perspective there is certainly ‘nothing to see here’ as far as the local labour market statistics are concerned.
Monetary policy was at the forefront last week as central banks across the world took a hawkish shift in their battle again inflation. We had the 5th Bank of England hike with no signs of stopping, a US Federal reserve rise of 75 bps – biggest in almost 3 decades – and the European Central Bank announced an end to stimulus measures and expected to raise rates next month.
Despite the upsurge in recessionary chatter, Northern Ireland’s labour market continues to churn out positive headlines. The ILO unemployment rate in the three months to April stood at 2.6%, just north of Q1 2020’s pre-pandemic level (2.5%) and the record low of 2.3% (Sep-Nov 2019). Both the HMRC payrolls data and the Quarterly Employer Survey (QES) posted record employee numbers for May and March 2022 respectively. Meanwhile there is still nothing of note on the redundancy front. From a recession watch perspective there is certainly ‘nothing to see here’ as far as the local labour market statistics are concerned.
The so-called Global Uncertainty Index hit a record high in 2019 before the word Coronavirus had even entered our consciousness. But the last 20 or so months have completely recalibrated the parameters of what uncertainty is. In the time since, businesses have had their worlds turned upside down and back again – things that they thought would never happen, did, and things they would have absolutely expected to happen didn’t – and have also therefore had to reset as well.
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The onset of the pandemic last year led economists to conservatively pencil in double-digit unemployment rates for the UK and Northern Ireland. What economists hadn’t initially factored in was the Chancellor’s Mario Draghi-style ‘Whatever it takes’ approach to protect jobs and prevent such an outcome from occurring. Rishi Sunak quickly unveiled the Job Retention Scheme (JRS) or furlough scheme. A policy designed to prevent mass unemployment by paying employers to keep jobs until the worst impacts of COVID-19 had passed. In time, economists progressively lowThe onset of the pandemic last year led economists to conservatively pencil in double-digit unemployment rates for the UK and Northern Ireland. What economists hadn’t initially factored in was the Chancellor’s Mario Draghi-style ‘Whatever it takes’ approach to protect jobs and prevent such an outcome from occurring. Rishi Sunak quickly unveiled the Job Retention Scheme (JRS) or furlough scheme. A policy designed to prevent mass unemployment by paying employers to keep jobs until the worst impacts of COVID-19 had passed. In time, economists progressively lowered their unemployment forecasts and revised down the anticipated surge in joblessness when the furlough scheme eventually ended. After several extensions, the Job Retention Scheme finally ended on the 30 September 2021.
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