Employment figures out today show that the number of people in work rose by 42,000 in the three months to July, and the number of unemployed rose by 10,000 to 1.82 million. Earnings are growing strongly too, up by 2.9 per cent over the year for the whole economy, and by 3.4 per cent in the private sector.
The Chancellor has used the numbers to warn of the risk Jeremy Corbyn poses to the economy. He said:
‘It is welcome news that pay packets are rising and jobs are being created. With wages up 2.9% over the year and inflation low, working people have received the fastest real terms rise in over a decade. At 73.5%, the employment rate is the highest it has been. But we still face risks both from the global economy and from those at home who would undermine our economic security, hike taxes and nationalise industry. This government will continue to support firms, increase training and provide more free childcare for working parents, as well as introducing a National Living Wage.’
With wages growing relatively strongly and the employment rate at a high, what about the risk of inflation? Vacancies are high, indicating that businesses can't find workers with the right skills, but there is slack in the labour market from people who are self-employed but would rather not be, and over a million part-time workers who want a full-time job but couldn't find one. And growth in wages appears to be matched by a growth in productivity: the number of weekly hours worked has fallen by 0.4 per cent in the three months to July – but despite that GDP is estimated to have grown by 0.7 per cent. That means less pressure on inflation to rise and on the Bank of England to raise rates. So with jobs growth flattening and wages and productivity rising, it looks like times are getting back to normal for the labour market – but there is little pressure for interest rates to do the same.