Yahoo Finance UK employment takes biggest tumble in four years
Employment in the UK has fallen at its fastest rate in four years amid growing evidence that a slowing economy is taking its toll on the labour market.
Figures from the Office for National Statistics showed that pay growth had fallen back in the three months to September, leading to speculation that the jobs market is past its peak.
Publishing data that may increase the chances of a cut in official interest rates from the Bank of England, the ONS said employment had fallen by 58,000 during the third quarter of 2019 – the biggest fall since May 2015.
The number of women in work dropped by 93,000, but was offset by a 35,000 increase in the number of men.
Businesses appear to have responded to the slowest annual growth in almost a decade by using less part-time labour. In the three months to September, part-time employment was down by 164,000, with women accounting for 106,000 of the fall.
Margaret Greenwood, the shadow work and pensions secretary, said: “These figures are a real cause for concern. Employment is down, wage growth has slowed and there has been a sharp fall in vacancies which clearly points to an economy that has stalled.”
The drop in employment was smaller than the 102,000 fall the financial markets had been expecting but job vacancies continued to become scarcer, resulting inthe biggest annual fall since late 2009.
Strong growth in employment has been a feature of the economy in recent years but a slowdown in growth and heightened Brexit uncertainty made businesses more cautious about hiring during the summer. The employment rate fell slightly in the latest three months from 76.1% of the working age population to 76%.
The decline in part-time roles occupied by women is likely to reflect a tougher environment in the high street, where businesses have been struggling with business rates and an above-inflation increase in the minimum wage.
The fall in employment coupled with a modest growth in the economy during the third quarter of 2019 meant productivity – or output per hour worked – rose by 0.3%. Over the 12 months to September, however, productivity was flat, continuing its weak performance in the period since the financial crisis and economic slump of 2008.
Inactivity – the number of people of working age who have stopped looking for a job – also rose and their removal from the jobless count meant unemployment fell in the latest quarter by 23,000 to 1,306,000. The unemployment rate dipped from 3.9% to 3.8%, its joint lowest since the winter of 1974-75.
The fall in employment was accompanied by an easing of annual earnings growth to 3.6% on both the measures used by the ONS – including and excluding bonuses.
Real earnings, pay packets adjusted for inflation, are estimated to be up by 1.8% including bonuses and by 1.7% excluding bonuses, helping to underpin consumer spending.
But the TUC general secretary, Frances O’Grady, said: “Working families are thousands of pounds out of pocket after a decade of dismal pay growth. That is not right. The Conservatives have presided over the longest wage squeeze since Napoleonic times. They have nothing to boast about.”
Chris Williamson, the chief economist at IHS/Markit, said news on Monday that the economy had contracted in both August and September had “been swiftly followed by a warning of how the growing economic malaise is feeding through to the labour market. Official data from the Office for National Statistics showed employers cutting headcounts at the fastest rate for four years in the third quarter.”
