For the three months between March and May 2016, the United Kingdom recorded a record low unemployment rate of 4.9%; which is 10 basis points below the psychological lower limit of 5% it hit earlier on in the year. The last time the UK economy experienced such low inflation rates was during Prime Minister Tony Blair’s administration back in 2005. This therefore comes as package of good news for the new Prime Minister for the United Kingdom Ms. Theresa May.
However, economists are very cautious as they analyze the numbers since these numbers reflect a period before the Brexit vote. On Tuesday evening ahead of the release of the data by the Office for National Statistics, Pantheon Macroeconomics said that any fall in the unemployment rate reflects “both a statistical quirk and the tendency of the labor market to lag the economy. Surveys of employment growth weakened sharply in the run-up to the referendum, and employment intentions likely deteriorated immediately after last month’s Brexit vote.” The positive unemployment data released could therefore be just for a short while before the pangs of Brexit vote start biting the UK economy employment statistics.
According to the statistics from the Office for National Statistics, the number of people employed increased between the three months of March 2016 and May 2016. The employment rate for people between the age of 16 and 64 stood at the highs of 74.4%; which is the highest level it has ever been to since comparable records began in 1971. On the other hand, the numbers of unemployed people, those people who are not working and those people who are not seeking or are not available for work (otherwise referred to as economically inactive) fell.
In total there were 31.7 million working people in the UK; which is 176,000 more people added to employment between March and May, compared to those in employment in the three months running up to February 2016. On a year-on-year basis, there are 624,000 more people added to employment in the March to May 2016 period compared to the same period last year. Of the 31.7 million working people in the UK, 23.19 million are working fulltime which is an additional 401,000 from the same period last year. The remaining 8.52 million people are working part-time; being an increase by 223,000 people from the same period last year.
In terms of unemployment, there were about 1.65 million unemployed people in the United Kingdom. These are people who are not in work but they are actively seeking and are available for work. This number was 54,000 fewer than the number in the three months up-to February 2016; and 201,000 fewer compared to data from the same period last year as well as the lowest figure since March to May 2008. Out of the total number of unemployed people 903,000 were men, which are 108,000 less than numbers from the same March to May period in 2015. On the other hand, 742,000 women were unemployed in the three months period under review; this being 93,000 fewer than the same period of March to May in 2015.
The report also shows that during the three months between March to May 2016, there were 8.87 million people aged from 16 to 64 years who were economically inactive. The total number was 46,000 people fewer than the numbers in the three months running up to February 2016 and 181,000 fewer than the numbers in the same period last year. The inactivity rate stood at about 21.6% which is the lowest rate since 1971 when comparable records began.
Despite these positive numbers, the effect of the Brexit vote on the UK economy cannot be overlooked going forward. With expected business shocks and cross-border restrictions, labor mobility will be affected and as a result this might have a negative effect on the employment statistics for Britain the second half of 2016.
However, the country’s leadership remains positive amid all the Brexit turmoil. Chancellor Philip Hammond said the statistics showed “the fundamentals” of the British economy are solid. He added: “While the decision to leave the European Union marks the beginning of a new phase for our economy, the message we take to the world is this: our country remains open for business and we are the same outward-looking, globally-minded, big-thinking country we have always been.”
This article was written by Idan Levitov from AO Markets