Today's jobs figures are pretty unambiguously good news. The number of people in work rose by 154,000 in the last three months of 2012 to a new record high of 29.73 million — surpassing pre-recession peak by 158,000. And unlike other recent rounds of employment growth, this wasn't driven by a rise in part-time workers (their number actually fell by 43,000).
But there are still a couple of reasons cause to greet this good news with caution. Rising employment at a time of economic stagnation has come at the expense of earnings. Adjusted for CPI inflation, average weekly earnings have fallen by 7 per cent in the last five years, back to 2004 levels. And the Office for Budget Responsibility doesn't expect them to start rising again until late-2014.
And there's the fact that the recent rise in employment is not expected to continue in 2013. The OBR expects the employment level to stay flat this year, before starting to grow again in 2014.
As a result, it predicts that the unemployment rate — now at 7.8 per cent, down from 8.4 per cent a year ago — will go back up to 8.3 per cent by the summer, and stay above 8 per cent until 2015.