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Economy in Brief

UK Employment Up, Unemployment Down in Latest 2 Monthly Reports
by Carol Stone April 16, 2004

Labor market conditions in the UK have improved markedly in the most recent months. The number of people employed ("labor force employment" in the table below) jumped 120,000 in the December reporting period and another 58,000 in the January period, which was published today. All these data except the Claimant Count are reported as 3-month centered moving averages; that is, the new January data are the average of December, January and February. The series begin in April 1992.

As jobs have increased, unemployment has decreased, with the unemployment rate reaching 4.8% in December and January, an all-time low. Labor force participation has increased, with the so-called "economic activity rate" climbing to an all-time high of 63.2% of the population over age 16. Unemployment is thus down because of the gain in jobs, not, as sometimes happens, because people are backing away from the labor force. Note that claims for the "Jobseeker's Allowance" have also declined.

At the same time, earnings have increased markedly. The "headline rate" for 12-month gains in average earnings jumped by 1.5 percentage points over the last two months. It is seen that the surge is entirely due to higher bonuses; this is a stark shift from earlier periods in 2001 and 2002, when decreasing bonuses meant workers with bonuses actually saw weaker compensation gains than workers with straight earnings alone.

UK: Selected Labor 
Market Indicators
"Feb" 
(3  months ended Mar)
"Jan" 
(3  months ended Feb)
"Dec"
(3  months ended Jan)
Year Ago ("Jan") 2003 2002 2001
Unemployment Rate (%) N.A. 4.8 4.8 5.1 5.0 5.2 5.1
Claimant Count (thous.) 882.2* 886.4* 891.7* 942.3* 933.2 946.7 969.9
Labor Force Employment (thous.) N.A. 28,330 28,272 28,012 28,111 27,865 27,668
   Change (thous.) N.A. 58 120 2 246 197 218
Average Earnings Index: "Headline Rate" Including Bonuses (Yr/Yr %Chg) N.A. 4.9 4.7 3.6 3.4 3.5 4.6
Average Earnings Index Excluding Bonuses (Yr/Yr %Chg) N.A. 3.9* 3.9* 4.0* 3.6 4.0 4.8
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