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UK Labour Market Remarkably Robust, Says EY

Mar 28
 
Tags: Ernst & Young LLP
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The UK labour market is performing much better than expected against a backdrop of ongoing Brexit uncertainty and a weak global economy, according to the EY ITEM Club.

In its latest labour market overview, the Office for National Statistics (ONS) revealed that the national employment rate for November 2018 to January 2019 stood at a record high of 76.1%, while the unemployment rate is just 3.9% - its lowest level since the period from November 1974 to January 1975.

For men, the estimated employment rate is 80.5%, a figure that was last surpassed in December 1990 to February 1991. Among women, the rate of 71.8% is the highest since records began in 1971.

Welcoming the report, EY described the figures as being "much stronger" than anticipated, with a number of previous surveys indicating that employers had adopted a cautious approach to employment given the continued confusion surrounding Brexit.

Furthermore, the UK's limited economic growth has done little to suggest a healthy employment market, with GDP increasing by just 0.2% over the three months to January.

The strong employment figures - coupled with a 3.4% increase in average weekly earnings - will help to encourage consumer spending at a time when the UK economy is being hampered by a range of external factors, EY commented.

However, the consulting firm cautioned that a combination of weak economic growth and a strong upturn in employment would spell bad news for UK productivity.

Annual growth in economic output per hour had already slipped to a two-year low of 0.2% in the quarter to September 2018, according to the most recent ONS productivity figures.

Howard Archer, chief economic advisor to the EY ITEM Club, said: "The labour market was much stronger than expected in January, extending its recent improvement despite a muted UK economy, heightened Brexit uncertainties and a weaker global economic environment."

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