The latest unemployment figures are a bit of a mixed bag. In the final three months of 2013, the number of people classified as jobless fell by 125,000.
Even so, the unemployment rate edged up from 7.1% in November to 7.2% in December. So, first things first. This is not the end of the decline in unemployment; it simply means that the rate of improvement slowed towards the end of the year.
The reason for that comes down to the way the Office for National Statistics calculates the figures, which is done on a rolling quarterly basis and not designed to pick up monthly changes.
In the latest set of data, the three months ending in December are being compared with the three months ending in September; when the last set of figures was released in January 2014, the comparison was between the three months to November 2013 and the three months to August 2013.
The comparison is affected by the month that drops out of the rolling quarterly comparison and the new month that enters it. What is clear is that the really rapid jobs growth, seen in the early autumn, moderated as the year came to an end.
But surveys of the labour market and the more up-to-date (if less comprehensive) claimant count both point to unemployment continuing to fall in early 2014. Why is the improvement less marked? There are three possible explanations.
The first is that the labour force is being increased by those who were formerly classed as inactive but have been encouraged to look for work by the fall in unemployment in the second half of 2013. Jobs are still being created but there are more people looking for them; hence unemployment is coming down more slowly.
The second, more tentative, explanation is that Britain is finally seeing a bit of productivity growth, illustrated by the 0.4% increase in total hours worked in the three months to December, which was below the 0.7% rise in national output.
Firms are getting more output from their existing workers and as a result don't need to hire so many new employees. The final explanation is that the economy's growth rate softened slightly towards the end of last year and this may have affected hiring.
In terms of policy, the unemployment news provides Mark Carney, governor of the Bank of England, and his colleagues with a bit more breathing space in their attempts to keep interest rates pegged at 0.5%.
It was not just that the headline jobless rate ticked up to 7.2%, it was that a large chunk of the reported increase in jobs is coming from self-employment and that pay is still running below inflation, despite a marginal increase in earnings growth to 1% in December.
The reaction of the City to the news told its own story. Sterling fell because markets believe Threadneedle Street will see the figures as justifying its wait-and-see approach on rates. But the fact that the pound's fall was modest reflected the belief that the months ahead will see further falls in unemployment.
theguardian.com
Even so, the unemployment rate edged up from 7.1% in November to 7.2% in December. So, first things first. This is not the end of the decline in unemployment; it simply means that the rate of improvement slowed towards the end of the year.
The reason for that comes down to the way the Office for National Statistics calculates the figures, which is done on a rolling quarterly basis and not designed to pick up monthly changes.
In the latest set of data, the three months ending in December are being compared with the three months ending in September; when the last set of figures was released in January 2014, the comparison was between the three months to November 2013 and the three months to August 2013.
The comparison is affected by the month that drops out of the rolling quarterly comparison and the new month that enters it. What is clear is that the really rapid jobs growth, seen in the early autumn, moderated as the year came to an end.
But surveys of the labour market and the more up-to-date (if less comprehensive) claimant count both point to unemployment continuing to fall in early 2014. Why is the improvement less marked? There are three possible explanations.
The first is that the labour force is being increased by those who were formerly classed as inactive but have been encouraged to look for work by the fall in unemployment in the second half of 2013. Jobs are still being created but there are more people looking for them; hence unemployment is coming down more slowly.
The second, more tentative, explanation is that Britain is finally seeing a bit of productivity growth, illustrated by the 0.4% increase in total hours worked in the three months to December, which was below the 0.7% rise in national output.
Firms are getting more output from their existing workers and as a result don't need to hire so many new employees. The final explanation is that the economy's growth rate softened slightly towards the end of last year and this may have affected hiring.
In terms of policy, the unemployment news provides Mark Carney, governor of the Bank of England, and his colleagues with a bit more breathing space in their attempts to keep interest rates pegged at 0.5%.
It was not just that the headline jobless rate ticked up to 7.2%, it was that a large chunk of the reported increase in jobs is coming from self-employment and that pay is still running below inflation, despite a marginal increase in earnings growth to 1% in December.
The reaction of the City to the news told its own story. Sterling fell because markets believe Threadneedle Street will see the figures as justifying its wait-and-see approach on rates. But the fact that the pound's fall was modest reflected the belief that the months ahead will see further falls in unemployment.
theguardian.com
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