Today's labour market statistics brought some much needed good news. The number of people in work rose by 181,000 over the quarter whilst the number of people unemployed (on the broad International Labour Organisation measure) fell by 65,000.
Crucially almost three quarters of the new jobs were full-time positions, in stark contrast to other recent falls in unemployment which have been explained by a rise in part-time working. One caveat came from the narrower but timelier claimant count of unemployment rose in June by 6,100, suggesting that it's not all clear sailing ahead.
But alongside the good headlines were some worrying signs of continuing weakness in the labour market.
The number of people out of work for over two years rose by 18,000 to reach 441,000 it's highest level since mid-1997 and perhaps most worryingly, the number of long-term unemployed young people continued to rise. The labour market is showing promising signs of recovery but many of those most at risk don't seem to benefiting. Two million people are still 'under-employed' either working on temporary contracts when they want permanent positions or in part-time work when they want full-time work.
It is hard to square these better headline figures from the jobs market with the recent onset of a double-dip recession. Over the past year GDP has been broadly flat whilst the total number of hours worked has risen by 2.9%, this suggests that productivity is still falling and that raises warning signs over the prospects for longer-term growth.
Alongside the better news on jobs the squeeze on living standards remains. As of April this year total average weekly earnings were growing 1.5% whilst RPI inflation, although falling, was at 3.1% - over twice as high. In other words prices are rising twice as fast than earnings and hence real wages continued to fall. Those in work are still getting poorer by the month. The early signs of recovery in the jobs market are not yet being matched by an increase in living standards.
Today's numbers should be welcomed as good news but the big question is how long can the labour market continue to improve in the absence of decent economic growth? Rising real wages are needed to underpin rising domestic demand and build the basis for a sustainable recovery in GDP, living standards and the labour market. Until we see the end of the squeeze on living standards it will hard to talk about 'recovery' in any meaningful way.
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