Not to put a downer on Wednesday’s news of the sharpest fall in UK unemployment for a decade but…
… the more we look at it, the more we’re finding reasons to be sceptical. Mostly regarding the post-crisis fate of Generation Y.
Howard Archer of IHS Global Insight explains:
The labour market is currently showing resilience in the face of a struggling economy, but the key question is can it last? We have serious doubts about this and suspect that unemployment will head up in the second half of the year as public sector jobs are increasingly pared and private sector companies become more cautious in the face of persistently sluggish growth. We think unemployment on the ILO measure could very well reach 2.6 million in 2012, taking the unemployment rate up to 8.3%
And he’s drilled down into the data to find negative stuff too:
The 19,600 spike up in May in the more timely claimant count measure of unemployment is worrying, as it cannot be fully put down to recent changes in the benefits system. This is the third successive rise in claimant count unemployment…
Ongoing muted wage growth is bad news for workers who continue to suffer appreciable real income declines. Total wage growth around 2.0% year-on-year in April is substantially below the May consumer price inflation rate of 4.5%. This reinforces belief that consumer spending will be muted over the coming months.
The big thing though is the data indicating that the majority of the fall in unemployment came from 18-24 year olds. Ostensibly, that’s encouraging, particularly in light of previous gripes verging on homicidal rage.
However, it is possible to read this data differently. Unemployment among 18-24 year olds fell by 79,000 — although that actually looks like it’s down to an increase in the number of economically inactive people in the labour market. Here’s what the release from the ONS report said:
The number of economically inactive people aged from 16 to 64 increased by 39,000 over the quarter to reach 9.37 million. This increase in inactivity was mainly due to an increase of 80,000 in the number of students not active in the labour market to reach 2.29 million. The total number of 16 to 24 year olds in full-time education increased by 61,000 on the quarter to reach 3.08 million.
The number of employees and self-employed people working part-time because they could not find a full-time job increased by 46,000 on the quarter to reach 1.21 million, the highest figure since comparable records began in 1992
Generation U, unable to find work, forced to flee into the chattel states of either education or part-time employment to avoid remaining jobless.
There’s a nasty feeling of treading water about this…
The consumer outlook – Duncan Weldon