This morning’s release has just about brought us to a corner on what turned out to be a road a lot straighter than it looked. A sort of economic equivalent of an optical illusion.
In the latest quarter, total actual weekly hours worked increased by 16.3 million hours to 1.05 billion hours in January to March 2023. This is 0.2 million hours below pre-coronavirus pandemic levels (December 2019 to February 2020).
If we allow for the various strikes then we are back to were we were pre pandemic. It looked as though we were going to in late 2021 and then we ebbed and flowed in a sign of the economic times and I suppose another sign of stagflation.
In terms of the detail in the latest numbers we have this.
The increase in the latest quarter was largely driven by men who remain below pre-coronavirus pandemic levels. Total actual weekly hours worked by women also increased and are above pre-coronavirus pandemic levels.
So in a sense it is a case of let’s hear it for the girls as it is us blokes who have held us back overall. The release eventually gets around to my strike point.
The actual weekly hours worked have recently been affected by additional bank holidays in the summer and autumn and strikes in recent periods.
Employment
This also has been improving recently.
The UK employment rate was estimated at 75.9% in January to March 2023, 0.2 percentage points higher than October to December 2022. The increase in employment over the latest three-month period was driven by part-time employees and self-employed workers.
As you can see there has been something of a structural change here. Post pandemic we saw employed workers recovering with self-employed plunging, Now self-employment is recovering.
The number of self-employed workers fell in the first year of the coronavirus pandemic. However, both full-time and part-time self-employed workers have increased in the latest quarter, with the number of part-time self-employed workers now above pre-coronavirus pandemic levels.
One way of looking at the pre and post pandemic era is essentially that we lost around 650.000 full-time self employed jobs leading to this effect on the employment rate.
0.7 percentage points lower than before the coronavirus pandemic (December 2019 to February 2020).
Actually we are still some 129.000 part-time employees short as well but the big move was a Bob Marley style effect on self-employment.
Exodus, alright! Movement of Jah people
Oh, yeah! O-oo, yeah! Alright!
Exodus, Movement of Jah people! Oh, Hell
Inactivity
This is an area that you may recall was of concern to the think tanks and indeed along the way the Bank of England. Regular readers will not be surprised what happened next…
The economic inactivity rate decreased by 0.4 percentage points on the quarter, to 21.0% in January to March 2023. The decrease in economic inactivity during the latest three-month period was largely driven by people aged 16 to 24 years
It eventually gets around to my previous suggestion that student numbers were a factor here.
The decrease in economic inactivity during the latest quarter (January to March 2023) was largely driven by those inactive because they were students, those inactive for other reasons, and those looking after the family or home.
So we had an improvement of 156,000 this time around which is rather awkward for the Bank of England claim that we are short of labour supply due to Brexit. Actually the net migration figures are bad news for its argument as well. But returning to this series we see that since the peak of last summer the rise in inactivity has fallen from 642,000 to 361,000.
There is an issue as shown below but I think the issues with the NHS and the post Covid backlogs make the numbers hard to fully explain.
Meanwhile, those inactive because of long-term sickness increased to a record high.
Wages
Having mentioned the Bank of England let me say I disagree with them in this area too and welcome the numbers below.
Growth in employees’ average total pay (including bonuses) was 5.8% and growth in regular pay (excluding bonuses) was 6.7% in January to March 2023.
These are historically high but are still short of the inflation we have seen. So workers are losing out whilst also being criticised for earning too much by our central bankers.
Using CPI real earnings, in January to March 2023, total pay fell by 4.0% on the year, a similar fall was seen in the previous three-month period. Regular pay fell by 3.1% on the year.
Oh and as an aside it is disappointing to see the Office for National Statistics try to present the numbers based on the widely ignored CPIH inflation measure as factual in the headlines. Fortunately it appears that most have seen through how useless it is.
One matter of note in the detail is that public-sector wage growth is catching up.
Average regular pay growth for the private sector was 7.0% in January to March 2023, and 5.6% for the public sector; a larger growth for the public sector was last seen in August to October 2003 (5.7%) and the difference between private and public sector growth rates has narrowed in recent months.
With the recent pay offers around and also the ongoing strikes that looks like a situation which is likely to persist. Oh and for all the talk about banking pay being restricted the numbers so frequently tell a different story.
In January to March 2023, the finance and business services sector saw the largest regular growth rate at 8.8%, followed by the manufacturing sector at 6.3% and construction sector at 6.2% However, when looking at total pay for the construction sector, this growth rate is much smaller at 3.7% because of a smaller bonus paid out in March 2023 compared with March 2022.
Unemployment
Whilst on the face of it the numbers below are not good news I am somewhat sanguine because of the inactivity numbers we looked at earlier.
Over the latest quarter, the unemployment rate increased…….The unemployment rate for January to March 2023 increased by 0.1 percentage points on the quarter to 3.9%.
For those unaware of the detail whilst we know that much of the inactivity fall went into employment it seems likely that there was enough to raise unemployment. But this was more of a classification rather than an actual economic change.
Comment
So far we have pretty much the same as previous views where the UK economy is benefiting from an energy situation better than feared. But the views we have seen of an improving situation have seen a bit of a challenge this morning.
The more timely estimate of payrolled employees for April 2023 shows a monthly decrease, down 136,000 on the revised March 2023 figures, to 29.8 million.
That number is erratic but the move is also rather large so it is likely that something has been picked up by the series. As it happens that coincides with some international data and let me start with this from China.
#China‘s #retail sales jumped 18.4% y/y in Apr, vs expected 20.2%, prev 10.6% #Industrial output grew 5.6% y/y in Apr, vs expected 9.7%, prev 3.9% ( @YuanTalks )
Then we got this from Germany.
The third drop in a row for the German ZEW index marks a turning point for the worse as any growth optimism from the start of the year evaporates ( ING)
Has the economic outlook changed? Or simply the cost of living crisis finally impacted? Only one morning’s news but it is of concern.