UK unemployment rose slightly in Q4 of 2017, from October to December compared with Q3, according to the latest figures published today from the Office for National Statistics.

During this period UK unemployment rose by 46,000 to 1.47 million, from 4.3% to 4.4% for the three months to the end of December.

Conversely, the number of people in employment increased by 88,000.

John Hawksworth, chief economist at PwC commented that this rise in unemployment did not necessarily demonstrate a weakness in the labour market as the number of those in full-time employment grew during the same period:

There was an unexpected rise in unemployment between the third and fourth quarters of 2017, but closer inspection suggests this is not a sign of labour market weakness as it was also accompanied by a healthy rise in total employment, focused on full-time jobs.”

Wages grew by an average of 2.5%, up from 2.4% the previous month, although the increase remained below inflation.

Mr Hawsworth explained:

Earnings growth remained broadly stable at 2.5%, still lagging some way behind the latest CPI inflation rate of 3%, so the real wage squeeze continues.

“The ONS has also done some additional analysis that throws light on why average earnings growth has been relatively subdued in recent years. Rather than this being due to rapid growth in low-skilled, lower paid occupations, it seems this has been due primarily to relatively lower earnings growth in professional and other higher skilled occupations, where jobs growth has been relatively strong in recent years.” ?

Minister for Employment Alok Sharma said:

High employment rates are a reliable feature of today’s economy – and this is an incredible achievement. It is equally important that across society everyone has the opportunity to get a good job and get on in life.

Today’s figures show that this government is building a fairer economy that supports people from all backgrounds to get into work. We are closing the BAME and gender employment gaps, and people across the country are accessing new opportunities.”

On the latest public finance data, John Hawksworth added: 

“The budget surplus in January was lower than last year due to reduced self-assessment tax receipts, which the OBR had foreshadowed in its November report. But the shortfall was not as bad as some feared, so the cumulative budget deficit in the financial year to January was still more than £7 billion lower than in the same period a year earlier.

“It is possible that self-assessment receipts in February will also fall short of last year’s levels, but it still looks likely that public borrowing for 2017/18 as a whole will come in below last year’s figure of £45.8 billion. We are therefore looking at a potentially significant shortfall in the budget deficit relative to the OBR’s November forecast of £49.9 billion.

“This will be a welcome windfall for the Chancellor, but we would expect him to bank it for now rather than spending it in his March Spring Statement, which looks set to be a low key affair. The Chancellor will want to retain as much room for manoeuvre as possible for his next Budget in November, bearing in mind ongoing uncertainties around the Brexit negotiations.”

Source: PWC  and ONS