Labour Market Statistics, November 2023
This briefing note sets out analysis of the Labour Market Statistics published this morning. As with last month, there is no Labour Force Survey (LFS) data published today as the ONS works to make methodological improvements, so today’s briefing covers data on vacancies, wages, payrolled employees (from HMRC ‘real time information’) and new ‘experimental’ estimates of employment, unemployment and economic inactivity.
Overall, today’s figures look suspiciously like those published last month – with the new experimental estimates all exactly the same as those published in October, and estimates of payrolled employees and of wage growth also almost unchanged. The impression is of a labour market that is treading water in an economy that isn’t growing either.
Of course things are not exactly the same as last month, and a closer reading has some broadly positive and also negative signs. Most positively, nominal wage growth remains very high – still running at above 7% year-on-year, and growing strongly for both public and private sector employers. Inflation has not fallen as much as we might like, but it has fallen enough to leave pay growth in real terms slightly positive, up by just over 1% on last year. However it does also look like pay growth has now peaked and will likely start to fall, and even with recent improvements in real pay we are earning barely any more than we did back in 2008.
Vacancy data also presents a mixed picture, with vacancies continuing to fall back but remaining well above pre-pandemic levels. Our view is that recent falls are likely more reflective of the labour market starting to function a bit more normally – fewer people moving jobs, fewer leaving the labour market, more competition for vacancies – than of a general slowdown in demand, although there are definitely some signs of things slowing down too. These signs are perhaps most pronounced in the PAYE data on employees by age and industry, which point to recent falls in the number of young people in work, and in employment in hospitality and construction – all of which tend to be warning signs that demand is weakening.
Looking ahead to next week’s Autumn Statement then, there is enough in today’s data – and in previous releases which included findings from the Labour Force Survey – to suggest that we should be doing more to boost labour and skills supply, which in turn could help meet shortages, support economic growth, raise living standards and control inflation. We set out at the end of the briefing the need for action in three areas next week, to:
■ Help more people to get into work, particularly by widening access to employment support;
■ Reform skills support to allow for more co-investment in flexible, demand-responsive training; and
■ Work better with employers – to improve access to advice and support around recruitment, workplace practice and employee support, and to expect more from employers in return.