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Is the labour market recovery running out of steam?

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Nigel Meager, director of the Institute for Employment Studies, comments on today's ONS Labour Market Statistics:

“The latest labour market figures from ONS report continued improvement on most of the main indicators, showing that the labour market recovery is continuing in the UK. There are, however, some changes in the speed and shape of the recovery. So although the employment total has increased, at 37,000, it is the smallest quarterly increase since early 2013. Similarly, although unemployment fell by 58,000, it is the smallest quarterly fall since late summer in 2013. Further, within the overall unemployment total, the numbers of young people (aged 16-24) who are unemployed has increased by 30,000 over the last quarter. Until now, youth unemployment had fallen steadily for two years. Similarly, economic inactivity (working-age people outside the labour market altogether) had also been falling, but the latest quarter recorded an increase in 66,000 over the quarter.

“On the positive side, the number of unfilled vacancies continues to rise, suggesting that employers’ labour demand remains buoyant. Looking within the overall employment figures it is interesting to note that, for the second month running, employment growth has been mainly among full-time employees, with total hours worked continuing to increase, while both part-time employment and self-employment have fallen. This may mean that as economic growth continues, full-time jobs are now at last beginning to replace some of the ‘under-employment’ which characterised the earlier stages of the recovery.

“Overall it is a mixed picture, and it’s too early on the basis of one month’s figures to ascertain whether the tide has turned and the labour market recovery is stalling, or whether it’s simply moving into a new more stable phase in which under-employment is being converted into full-time jobs. If it’s the latter, then we may expect to see unemployment continuing to fall but rather more slowly than recently.”