Yael Selfin, Chief Economist at KPMG in the UK, comments on today’s labour market data:
“The latest labour market data shows a mixed picture. While the unemployment rate rose marginally to 4.4% in the three months to December 2017, and the employment rate also fell slightly, the number of vacancies reached a record high of 823,000 between November 2017 and January 2018, pointing at an increasingly tight labour market. High demand for workers saw a rise in the number of people working full time and a continued fall in the number of self-employed.
“With the market reaching boiling point, more may need to be done to alleviate labour shortages in services, and in particular in consumer and retail, health and social care services where they have been reported most acutely. More targeted training for school leavers to improve the skills of younger workers is also needed as data shows those between the age of 16-24 experience more difficulties in getting jobs. Focusing on regional performance is also important, with the rise in unemployment driven by increases in Wales and Scotland, of 0.9 and 0.5 percentage points respectively, while England experienced no change from the previous quarter.
“There are signs that average weekly earnings, which rose by 2.5% in Q4, are beginning to respond to the tightness of the labour market, although households are still feeling the squeeze when accounting for inflation, with real earnings falling by 0.3%. However, there are very encouraging signs for UK productivity performance, which rose relatively strongly for the second quarter in a row, led by finance and business services. If stronger productivity continues into 2018, the Bank of England may decide to hold at least once on raising rates this year.”
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