Wednesday, December 14, 2016

Unemployment falls agains and is still at an 11-year low

The Office for National Statistics (ONS) released the latest UK employment figures today which show a further modest improvement in Britain's employment position.

UK unemployment fell slightly to 1.62 million in the three months to October

It meant the unemployment rate held steady at 4.8% in the period, remaining at an 11-year low. This was helped by more women in work - rising to a record high of nearly 15 million - and the addition of 129,000 self-employed workers taking their total to 4.75 million, according to the ONS figures.

The figures are based on the Labour Force Survey, in which the ONS speaks to about 40,000 households every quarter. That is a very large survey, but it still means the figures are not precise.

The ONS is 95% confident that the unemployment figures they released today are accurate within a margin of error of 77,000 either way.

In statistician's language, the best estimate of the number of people unemployed in Britain in July to September was estimated at 1,616,000, with a stated 95% confidence interval of +/- 77,000. This means there is a probability of 95% that the actual number of unemployed people was between 1,539,000 and 1,693,000. See the ONS website here.

The implication of this is that the substantial improvement in Britain's unemployment figures over the past year as a whole - for example, that there were 342,000 more people in work over the third quarter of 2016 compared with the same quarter of the previous year - are real and statistically significant, but the much more modest changes compared with the previous quarter - such as the fall of 16,000 in the number of people unemployed - are not statistically significant.

There was also good news on wages

Average weekly earnings excluding bonuses rose by 2.6% - a slight increase on the previous month.

There is something here for Leavers and Remainers alike ...

For those on both sides who are determined to interpret any economic news to reinforce their pre-existing views on Brexit, there was plenty of ammunition enabling these figures to be "spun" either way.

Remainers who argue that the decision to vote Leave and the consequent fall in the pound and rise in import costs has damaged the economy, were quick to point out that the number of people in work and the employment and unemployment rate appear to be stabilising where before June the economy was creating more jobs at a rapid rate.

Leave supporters can, however, legitimately point out that employment and unemployment are stabilising respectively at historically very high and very low levels for the UK economy and that Britain has one of the lowest unemployment rates in the EU, behind only Germany and the Czech Republic.

Those with a reasonably open mind and an IQ higher than that of a wombat with learning difficulties will realise that both sides have some valid points to make and the evidence does not yet provide conclusive proof for either. I agree with Work and Pensions Secretary Damian Green who said it was "too early" to conclude Brexit uncertainty was affecting the labour market.

"We are in a broadly flat situation, but it's a flat situation at a very low level of unemployment," he told the BBC.

Going into next year's Brexit negotiations, "It's extremely encouraging that our labour market is so resilient," he added.

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