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Unemployment and Employment Both Fall

The number of people unemployed between September and November 2009 fell by 7,000 to reach 2.46 million, according to the ONS this morning. Many economists had been expecting a rise in unemployment to about 2.50 million. This is the first quarterly fall in unemployment since the three months to May 2008, and gives an unemployment rate of 7.8%.

 

However, there was a rise in the long-term unemployed. Those out of work for more than a year rose by 29,000 over the quarter to reach 631,000, which was the highest total since the three months to November 1997. This is obviously a serious problem and suggests that there may be a structural problem reflecting redundant skills in parts of the workforce.

 

The number of people who were claiming Jobseeker’s Allowance in December 2009, also known as the claimant count, also fell by 15,200 on the previous month to reach 1.61 million. This was the second month running that the claimant count has fallen and it reflected the largest monthly fall since April 2007.

Is unemployment back on track?

Is unemployment back on track?

 

This provides additional evidence that the economy is moving out of recession and is added to by the fact that the number of vacancies in the three months to December 2009 rose by 16,000 to 448,000.

 

On the other hand, the employment rate fell by 0.1% on the September to November quarter to reach 72.4%. This meant that the number of people in employment fell by 14,000 to reach 28.92 million. However, although this figure is worrying on its own, it is made worse by the fact that the number of people employed full-time during the quarter fell by 113,000 which was offset by a rise in the part-time employed of 99,000. It is not good news that we seem to be swapping full-time jobs for part-time ones, and this fact is in danger of being masked by the lower fall in total employment. In fact, the figures show that there were 1.03 million employees and self-employed people who were working part-time, solely because they could not find a full-time job.

 

As far as earnings are concerned, average regular pay excluding bonuses rose by 1.1% in the three months to November compared with a year earlier. The level of unemployment is therefore keeping earnings down reflecting the amount of slack in the economy. And, it looks as though this slack will get worse as we can expect something of a cull in the number of public sector jobs after the election. “Vote for us now and lose your job later” will probably be one of the more popular electoral slogans.

 

So, as far as unemployment is concerned, we have seen some surprisingly good figures but we are not out of the woods yet, and is doubtful whether the creation of private sector jobs from the recovery will be able to outweigh the loss of jobs in the public sector.

 

Finally, I have just come across an interesting, recently published article by the Federal Reserve Bank of San Francisco, entitled ‘Inflation: Mind the Gap’. This provides research that suggests that the Phillips Curve has made a comeback during the recent recession. You can access it here.

 

 

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Posted in Earnings, Employment, unemployment

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