Unemployment falls further but labour market uncertainty remains

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The number of unemployed people in the UK fell by 7,000 on the previous quarter in the three months to July, according to the latest labour market data from the Office for National Statistics (ONS).

The figures point to the jobs market continuing to defy the negative economic outlook, with the reduction meaning that there are now 2.59 million unemployed people in the UK.

The ONS figures highlight an employment rate of 71.2%, the highest figure since the three months to April 2009, and an increase of 0.5 percentage points on the previous quarter. In addition, the number of people aged 16 and over in employment increased by 236,000 during the quarter, to reach 29.56 million. This is the largest quarterly increase since the three months to July 2010.

However, despite the positive figures, some of the ONS’s findings also highlight the long-term challenges facing the jobs market.

Perhaps most significantly, the figures show that 8.12 million people are in part-time jobs, an increase of 134,000 and the highest level since comparable records began in 1992. In addition, the number of employees and self-employed people who were working part time because they could not find a full-time job increased by 24,000 on the quarter to reach 1.42 million, similarly, the highest figure since comparable records began in 1992.

Also, the number of people unemployed for more than one year reached 904,000 during the quarter. This is the highest figure since the three months to May 1996, up 22,000 on the previous quarter.

And, while the number of unemployed people fell by 7,000 on the previous quarter, it increased by 61,000 year on year, to reach 2.59 million. At the same time, there was an increase of 102,000 in the number of full-time workers, bringing the total figure to 21.44 million.

Commenting on the figures, David Kern, chief economist at the British Chambers of Commerce, said: “The latest job market figures are once again encouraging and support our belief that the UK economy has returned to positive growth in the third quarter. Employment is up, unemployment and the claimant count are down, and the rate of inactivity is at its lowest since 1991. These figures will no doubt raise more questions about the accuracy of the latest GDP figures, which show three consecutive quarters of negative growth.

“Despite this positive news, there are still some areas of concern. The number of people forced to work part time because they cannot find a full-time job has reached a new high and there are still too many young people unemployed. More deficit cuts in the coming months mean there will be a further reduction in public-sector employment, although it is reassuring to see that the private sector is willing and able to create new jobs.

“Overall, it is clear that growth is still too weak, and problems in the eurozone will continue to put pressure on our exporters. The Government must build on the positive job figures by implementing more policies that allow businesses to deliver growth.”

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