Jobs figures are a telltale sign, offering insight into the overall UK economy. As valuable as the information is, however, analysts tend to read into employment reports, claiming job trends prove every possible economic scenario. Recent data shows a falling jobless rate, but some observers see dark undercurrents in the data, interpreting signs Brexit may be starting to exert force on UK employment conditions.
What Do the Numbers Mean?
Employment is the cornerstone of personal financial health. Regardless of the trends larger economic indicators may illustrate within the UK economy, access to consistent employment is what matters to British families. UK workers have access to online loans, without credit checks, but a low jobless rate is good news for mums and dads with mouths to feed and bills to pay. Despite the dip in the jobless rate, some observers still point to signs the jobs boom may soon be under strain.
The jobless rate fell to the lowest level seen since the 70’s, during the early part of 2019. Hiring in the days before the original Brexit departure date helps explain the continuing, positive jobs momentum. According to the Office for National Statistics, the jobless rate fell to 3.8 per cent in the first quarter, which represents the lowest reported jobless rate since 1975.
Unemployment also performed well according to recent data, dropping by 65,000. The drop is the most in more than two years. Despite these positive indicators, however, wage growth was down, and employment growth slowed to 99,000. The figure underperformed a median expectation of 135,000, predicted in a poll of economists conducted by Reuters.
It is thought March’s peak Brexit anxiety may have been worrisome enough for many employers to slow hiring and limit pay increases. A complex environment prevails, however, so it’s hard to isolate cause and effect relationships. With a Brexit wildcard in play, the recent figures may well be a short-term anomaly, which could bounce back if the jobless run continues ahead of the new Brexit date.
Is the Labour Investment Misleading?
Hiring indicates investment from employers, which is almost always seen as a good thing. If you spin it another way, as some analysts have done, investing in labour may be a sign from businesses that they’re reluctant making longer-term investments. The holding pattern seen surrounding other capital investment may be directly tied to the Brexit uncertainty.
Workers are easily laid-off, should a post-Brexit slide undercut the investment, whereas other capital spending is not as easy to retrieve, if things turn south following Britain’s departure from the European Union.
Uncertainty has been the only consistent feature of Brexit, which was first set for March 29th, but has since been extended two times, until the 31st October. May is now set to step down amidst the tenuous negotiations, which is sure to cast further uncertainty on the ultimate outcome of the referendum decision handed down long ago.
Rising inequality remains a symptom of the UK economy, with one renowned economist recently comparing the UK’s trajectory to that seen in the United States, where inequality is pronounced. Total earnings have risen for UK workers, yet many UK families have experienced no increase to their living standard. The disparity has many economists believing the Bank of England may be eager to raise interest rates, after some of the Brexit instability quiets down.
Weak productivity growth, also plaguing the UK economy, does not stack up well when hiring is on the up. What does the future hold for the added workers, when productivity fails to grow alongside the total labour force? The answer may not bode well for robust post-Brexit employment conditions.
Among the many reflections of Brexit worries, the jobless rate is up, yet economists see cracks in the overall health of Britain’s labour market. Only time will tell whether the current hiring surge is sustainable, and how Brexit plays out on the UK economy. In the meantime, the jobless rate is down and UK employers are investing in labour.