Ruth Lea CBE has been Arbuthnot Banking Group’s Economic Adviser since 2007 and was an Independent Non-Executive Director from 2005-2016.

Ruth co-founded Global Vision in 2007 and was Director until 2010, and was previously the Director of the Centre for Policy Studies (from 2004 to 2007), Head of the Policy Unit at the Institute of Directors (from 1995 to 2003) and Economics Editor at ITN (from 1994 to 1995).  Prior to ITN she was Chief UK Economist at Lehman Brothers, Chief Economist at Mitsubishi Bank, worked for 16 years in the Civil Service (the Treasury, the DTI, the Civil Service College and the Central Statistical Office) and was an economics lecturer at Thames Polytechnic (now the University of Greenwich).

She is the author of many papers and articles on economic issues and has been a Governor of the London School of Economics and Council Member of the University of London.

Tel: 020 8346 3482
Mobile: 07800 608 674
Email: ruthlea@arbuthnot.co.uk

 

From the desk of Ruth Lea

Economic insight and financial comment related to the ever-changing financial landscape and the economic world at large.

Economic Perspectives

24th January 2022

Economic Insight - 24 January 2022

Bank expected to raise Bank Rate in February as inflationary pressures mount
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest developments in the UK economy:
Press Release

Bank expected to raise Bank Rate in February as inflationary pressures mount

Date: 24th January 2022

In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest developments in the UK economy:
  • The MPC is meeting in early February (announcement on 3 February). It is widely expected there will be another interest rate increase, probably to 0.5%.
  • The Bank will be releasing revised forecasts in February. The inflation forecast is expected to be revised significantly higher, partly reflecting higher gas prices.
  • The Prime Minister announced on 19 January the lifting of December’s Plan B Covid-related restrictions (from 26 January, England).
  • CPI inflation rose to a greater-than-expected 5.4% in December, from November’s 5.1%, effectively the highest rate since March 1992. The ONS noted that the YOY inflation rates (for households) were 18.8% for electricity and 28.1% for gas.
  • Producer prices inflation rates eased in December, reflecting lower prices for petroleum products and crude oil in the month. Oil prices have subsequently firmed.
  • ONS data show house prices rose by 10.0% (YOY) in November, from October’s 9.8%. London continued to be the region with the lowest annual growth.
  • Retail sales fell 3.7% (MOM) in December, following the 1.4% increase in November, as the Omicron variant spread.
  • The number of payroll employees rose to 29.5mn in December, some 409,000 more than in pre-pandemic February 2020.
  • In the three months to November employment rose by 60,000 (QOQ) and the unemployment rate eased to 4.1%. But the inactivity rate was 1.0 percentage points above, and total hours 33.5mn hours below, the levels recorded in the pre-pandemic three months to February 2020.
  • Vacancies in 2021Q4 were at record levels.
  • Annual earnings growth (nominal terms) is moderating as temporary factors which drove growth higher fall out of the YOY calculations. Annual growth in average total pay (including bonuses) was 4.2% and regular pay (excluding bonuses) was 3.8% in the three months to November 2021. In real terms (inflation adjusted) total pay grew at just 0.4% (YOY), whilst regular pay was flat in the three months to November. Single-month growth in real earnings for November 2021 actually fell (YOY) for the first time since July 2020, at negative 0.9% for total pay and negative 1.0% for regular pay.
International update:
  • The Fed is meeting next week (announcement on 26 January). It may bring forward the ending of the QE programme (currently scheduled for mid-March). An increase in interest rates is expected at the March meeting.
  • The ECB is meeting in early February (announcement on 3 February). There are few expectations of a policy change.
Ruth Lea said “…in December the Bank judged that CPI inflation would peak at around 6% in April 2022. Given the higher-than-expected inflation outturns to date and the persistence of high gas prices, there are increasing expectations that inflation may peak at around 7% rather than 6%. Rising prices inflation has clearly heightened the Bank’s concerns that an inflationary spiral, in which higher prices feed into higher wage demands, could become established. Moreover, as the Bank’s Chief Economist indicated last month, whilst there was little the Bank could do to affect high energy prices, the Bank would seek to limit domestically generated pressures such as rising wages in a tight jobs market. Under these circumstances, widespread expectations of a further 0.25% increase in the Bank Rate, to 0.5%, look eminently reasonable.”

For full story: http://www.arbuthnotgroup.com/economic_perspectives_group.html 

Press enquiries:

Arbuthnot Banking Group PLC: 

Ruth Lea, Economic Adviser 
07800 608 674, 020 8346 3482
ruthlea@arbuthnot.co.uk 
Follow Ruth on Twitter @RuthLeaEcon

Maitland: 
Sam Cartwright 
020 7379 4415
arbuthnot@maitland.co.uk

Download full article

17th January 2022

Economic Insight - 17 January 2022

November’s growth takes GDP above the pre-pandemic February 2020 level for the first time
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest developments in the UK economy:
Press Release

November’s growth takes GDP above the pre-pandemic February 2020 level for the first time

Date: 17th January 2022

In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest developments in the UK economy:
  • GDP rose by a greater-than-expected 0.9% (MOM) in November and was above the pre-pandemic February 2020 level for the first time, by 0.7%.
  • Services rose by 0.7% (MOM), partly driven by a buoyant increase in retail trade.
  • Within manufacturing, output of motor vehicles by 7.8%, and the ONS commented on “anecdotal evidence around improvements to the sourcing of parts”.
  • Construction output increased by 3.5% (MOM).
  • The total trade (goods & services, including precious metals) balance showed a surplus of £0.6bn in November 2021, as the goods deficit was outweighed by the services surplus, after October’s surplus of £0.2bn. There was a major improvement in the precious metals surplus.
  • The ONS released revised productivity data for 2021Q3 but warned that they were distorted by the furlough scheme. For the record, output per hour fell by 1.4% (QOQ) in 2021Q3 but was 1.1% above the level of pre-pandemic 2019. Output per worker, however, rose by 0.3% (QOQ) in 2021Q3, but was still 0.6% below the 2019 level.
  • The ONS also reported that public service productivity was 8.1% lower in 2021Q3 than in 2019, as the growth in 18.6% inputs had outpaced output growth of 8.9%.
In addition:
  • The OECD reported that CPI inflation for the OECD area rose to 5.8% (YOY) in November 2021, driven by higher energy prices, the highest rate since May 1996. Energy prices inflation was 27.7% (YOY) in November, the highest rate since June 1980.
  • The World Bank, in its latest Global Economic Prospects, forecast that global GDP growth would decelerate markedly from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023.
  • Oil prices have strengthened in recent weeks, reversing the weakening seen in November. Brent crude oil futures were around $86pb on 14 January, having dipped to under $69pb on 1 December 2021. As widely expected, OPEC+ agreed at their 4 January 2022 meeting to increase their production total by 400,000 bpd for the month of February 2022.
  • UK natural gas prices have eased back since spiking at a record of over 450 pence per therm on 21 December 2021, but they are still very substantially higher than a year ago. On 14 January 2022 the price was 203 pence per therm, compared with 55-65 pence per therm recorded in January 2021.
Ruth Lea said “The bounce in November’s GDP was noticeably stronger-than expected, though December’s GDP is still expected to weaken as covid-related restrictions were tightened in the month. The ONS noted that, providing their December estimate does not fall by more than 0.2% (MOM) and there are no adverse revisions, GDP in 2021Q4 should be back to the 2019Q4 pre-pandemic level, or even surpass it. However, even with this relatively benign outcome for December, quarterly growth for 2021Q4 would still fall short of the OBR’s October projection, as the outturn for 2021Q3 fell short of the OBR’s projection.”

For full story: http://www.arbuthnotgroup.com/economic_perspectives_group.html 

Press enquiries:

Arbuthnot Banking Group PLC: 

Ruth Lea, Economic Adviser 
07800 608 674, 020 8346 3482
ruthlea@arbuthnot.co.uk 
Follow Ruth on Twitter @RuthLeaEcon

Maitland: 
Sam Cartwright 
020 7379 4415
arbuthnot@maitland.co.uk

Download full article

12 (2021)(2020)

Comment, at a glance

Public sector net borrowing £16.8bn in December
25 January 2022

The ONS estimated that public sector net borrowing (PSNB-ex, excluding public sector banks) in December 2021 was £16.8bn, compared with £24.4bn in December 2020, £7.6bn lower. It was the fourth highest December borrowing since monthly records began in 1993.

The CGNB was £16.2bn in December 2021, compared with £23.5bn in December 2020 (table 4):
·       Central government receipts in December 2021 were estimated to have been £68.5bn, a £6.2bn increase compared with December 2020. Of these receipts, tax revenue increased by £4.6bn to £50.7bn.
·       CG bodies spent £84.7bn, £1.0bn less than in December 2020. Interest payments on central government debt were £8.1bn in December 2021 (a December record) compared with £2.7bn in December 2020. The recent high levels in debt interest payments are largely a result of movements in the Retail Prices Index (RPI) to which index-linked gilts are pegged.
·       Within total spending, net investment was £5.4bn (£5.5bn in December 2020).  

PSNB for the first nine months of FY2021 totalled £136.0bn, £129.3bn less than the equivalent period in FY2020. But it was the second-highest financial year-to-December borrowing since monthly records began in 1993. Official forecasts suggest that borrowing may reach £183.0bn by the end of FY2021, £138.8bn less than the £321.8bn borrowed in the FY2020.

Concerning other key metrics:
·       Public sector net debt (excluding public sector banks, PSND ex) at end-December 2021 was £2,339.9bn or around 96.0% of gross domestic product (GDP), the highest ratio since March 1963 when it was 98.3% (table PSA1).
·       Public sector net debt excluding public sector banks and the Bank of England (PSND ex BoE) was £2,016.5bn at the end of December 2021 or around 82.7% of GDP (table PSA1). Note that the Bank of England’s (BoE’s) contribution to debt is largely a result of its quantitative easing activities via the Bank of England Asset Purchase Facility Fund (APF) and Term Funding Scheme (TFS).
·       The public sector debt interest to revenue ratio (DIR) in the rolling 12-months to December 2021 was 4.5pp, compared with 2.6pp a year earlier (table PSA4/4).

 

Source: ONS, “Public sector finances: December 2021”, 25 January 2022.

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Public sector net borrowing £16.8bn in December
25 January 2022

The ONS estimated that public sector net borrowing (PSNB-ex, excluding public sector banks) in December 2021 was £16.8bn, compared with £24.4bn in December 2020, £7.6bn lower. It was the fourth highest December borrowing since monthly records began in 1993.

The CGNB was £16.2bn in December 2021, compared with £23.5bn in December 2020 (table 4):
·       Central government receipts in December 2021 were estimated to have been £68.5bn, a £6.2bn increase compared with December 2020. Of these receipts, tax revenue increased by £4.6bn to £50.7bn.
·       CG bodies spent £84.7bn, £1.0bn less than in December 2020. Interest payments on central government debt were £8.1bn in December 2021 (a December record) compared with £2.7bn in December 2020. The recent high levels in debt interest payments are largely a result of movements in the Retail Prices Index (RPI) to which index-linked gilts are pegged.
·       Within total spending, net investment was £5.4bn (£5.5bn in December 2020).  

PSNB for the first nine months of FY2021 totalled £136.0bn, £129.3bn less than the equivalent period in FY2020. But it was the second-highest financial year-to-December borrowing since monthly records began in 1993. Official forecasts suggest that borrowing may reach £183.0bn by the end of FY2021, £138.8bn less than the £321.8bn borrowed in the FY2020.

Concerning other key metrics:
·       Public sector net debt (excluding public sector banks, PSND ex) at end-December 2021 was £2,339.9bn or around 96.0% of gross domestic product (GDP), the highest ratio since March 1963 when it was 98.3% (table PSA1).
·       Public sector net debt excluding public sector banks and the Bank of England (PSND ex BoE) was £2,016.5bn at the end of December 2021 or around 82.7% of GDP (table PSA1). Note that the Bank of England’s (BoE’s) contribution to debt is largely a result of its quantitative easing activities via the Bank of England Asset Purchase Facility Fund (APF) and Term Funding Scheme (TFS).
·       The public sector debt interest to revenue ratio (DIR) in the rolling 12-months to December 2021 was 4.5pp, compared with 2.6pp a year earlier (table PSA4/4).

 

Source: ONS, “Public sector finances: December 2021”, 25 January 2022.

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Markit/CIPS flash composite output index suggests subdued growth in January
24 January 2022

The Markit/CIPS flash UK Composite Output Index slipped to 53.4 in January, after December’s 53.6, an 11-month low. The slowdown was centred on the service sector, which more than offset a modest acceleration in manufacturing production.

Concerning the component indices:
·       The Markit/CIPS flash UK Services Business Activity Index was 53.3 in January, a tad down from December’s 53.6. Hospitality, leisure and travel all struggled due to Omicron restrictions, but there was resilient growth in business and financial services. Strong inflationary pressures continued across the service sector at the start of 2022. Both input costs and output charges increased at the second-fastest rate since the survey began in July 1996 (exceeded only by November 2021). Survey respondents overwhelmingly noted that higher raw material costs, staff wages and energy bills had led to a repricing of their services.
·       The Manufacturing Output Index, however, picked up a tad to 53.8 in January, after December’s 53.6. Manufacturing output increased to the greatest extent since August 2021, despite survey respondents often reporting a negative impact on production from staff isolating due to COVID-19 and supplier delays.
·       Note the wider manufacturing PMI was 56.9 in January, down on December’s 57.9. This partly reflected the worst month for new order intakes since January 2021. Some manufacturers noted lower sales to customers hit by Omicron restrictions, while others suggested that forward-purchasing to beat new price lists for 2022 had weighed on demand in January. (The manufacturing PMI is a weighted average of new orders, output, employment, suppliers’ delivery times, and stocks of purchases.)

Chris Williamson, Markit’s Chief Business Economist, said “…looking ahead, while the Omicron wave meant the hospitality sector has sunk into a third steep downturn, these restrictions are now easing, meaning this downturn should be brief. Many business and financial services companies have meanwhile been far less affected by Omicron and saw business growth accelerate at the start of the year. Business confidence in the outlook also picked up, driving sustained solid jobs growth. With inflationary pressures remaining elevated at near-record levels, this all adds to the likelihood of the Bank of England hiking interest rates again at its upcoming meeting.”

 

Source: Markit/CIPS flash UK composite PMI, “Two-speed recovery in January as Omicron variant continues to weigh on customer-facing parts of the economy”, 24 January 2022. The Composite Output Index is a weighted average of the UK Manufacturing Output Index and he UK Services Business Activity Index, which are comparable indices.

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Retail sales fell 3.7% in December
21 January 2022

Retail sales volumes fell by 3.7% (MOM) in December, but they were still 2.6% higher than in pre-pandemic February 2020. They were 0.9% down (YOY).

Non-food stores sales volumes fell by 7.1% in December 2021, with falls in each sub-sector (department stores, clothing stores, other non-food stores and household stores) following strong sales in November. The omicron variant, which increased in December, was reported by some retailers as impacting retail footfall. Automotive fuel sales volumes declined by 4.7% in December 2021 as increased home working reduced travel, whilst food store sales volumes slipped by 1.0% (MOM).

The proportion of retail sales online picked up to 26.6% in December 2021, after November’s 26.3%, and it was still substantially higher than pre-pandemic February 2020 (19.7%).

In 2021Q4 retail sales decreased by 0.2% (QOQ) but were 0.4% higher (YOY). In the year 2021 they grew by 5.1% (YOY) but note that sales were down in 2020, reflecting restrictions on travel and non-essential retail.

Source: ONS, “Retail sales, December 2021”, 21 January 2022.  

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ONS
house prices 10.0% annual increase in November
19 January 2022

According to official data, UK average house prices rose by 10.0% (YOY) in November, slightly up on October’s 9.8%. The latter half of 2020 saw the UK's average house price growth accelerating. This trend continued into 2021; the UK average house price for November 2021 was £271,000, up from £267,000 in October 2021. Prices rose by 1.2% (MOM) on a non-seasonally adjusted basis in November and rose by 1.4% (MOM) on a seasonally adjusted basis.

The Stamp Duty Land Tax (SDLT) nil rate threshold (for England and Northern Ireland) was reduced from £500,000 to £250,000 on 1 July and reverted to £125,000 on 1 October. The tax holiday ended on 31 March 2021 in Scotland and on 30 June 2021 in Wales. The UK House Price Index (HPI) is based on completed housing transactions.

The inflation rates for the UK’s four countries in November were: England (9.8% YOY), Wales (12.1% YOY), Scotland (11.4% YOY), and Northern Ireland (10.7% (2021Q3, YOY)). In England, there was, as always, a significant range across the nine regions (figure 4). The complete list of annual price changes is: South West (12.9%), East (12.3%), North West (10.8%), East Midlands (10.7%), West Midlands (9.8%), South East (9.6%), North East (8.7%), Yorkshire & Humberside (7.2%), and London (5.1%). London continued to be the region with the lowest annual growth.

 

Source: ONS, “UK house prices index: November 2021”, 19 January 2022.

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Producer prices inflation rates slip to 9.3% (output) and 13.5% (input) in December
19 January 2022

The inflation rate for the output PPI (goods leaving the factory gate) slipped a tad to 9.3% (YOY) in December, compared with 9.4% in November (table 1). This was the first time the annual rate of output inflation had slowed since May 2020. Of the 10 product groups, nine showed positive annual growth in December 2021. Petroleum provided the largest upward contribution and had annual price growth of 68.1% in December 2021. 

The inflation rate for the input PPI (materials and fuels used in the manufacturing process) slipped to 13.5% (YOY) in December, from 15.2% (YOY) in October (table 3). On the month, the rate of input inflation was negative 0.2% in December 2021, down from 1.5% in November 2021. This was the first time the monthly rate had been negative since August 2020 and was mainly driven by crude oil and fuel with negative monthly rates of 7.9% and 11.2% respectively. (Note oil prices have since significantly firmed.) Even though crude oil prices fell by 7.9% (MOM) in December they were still 47.3% higher (YOY, table 5).

The annual rate of inflation for imported materials and fuels decreased to 7.0% (YOY) in December, from 7.6% in November (table 4). Imported materials and fuels represent roughly two-thirds of overall materials and fuels (input prices) in terms of index weight. Note that the sterling effective exchange rate index (ERI) slipped by 0.1% (MOM) in December but was 4.4% higher YOY (table 4).

 

Source: ONS, “Producer price inflation, UK: December 2021, including services, 2021Q4”, 19 January 2022.

 

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CPI inflation rate rose to 5.4% in December
19 January 2022

The Consumer Prices Index (CPI) YOY rate rose to a greater-than-expected 5.4% in December, after November’s 5.1%. 5.4% was the highest CPI 12-month inflation rate in this particular statistical series, which began in January 1997, and it was last higher in the historical modelled data series in March 1992, when it stood at 7.1%. The CPI rose by 0.5%% (MOM) in December 2021, compared with a 0.3% rise (MOM) in December 2020.

The CPIH inflation rate (YOY), the ONS’s preferred measure, rose to 4.8% in December, after November’s 4.6%, and the highest rate since September 2008 when it was also 4.8%. The largest upward contributions to the December 2021 CPIH YOY rate came from transport (principally from motor fuels and second-hand cars) and housing and household services. The CPIH rose by 0.5% (MOM) in December 2021, compared with a 0.2% rise (MOM) in December 2020.

Specifically, the ONS noted that:
·       The 12-month inflation rates were 18.8% for electricity and 28.1% for gas in October 2021, reflecting the price cap increases for electricity and gas in October 2021, combined with the April 2021 increases. These rates were unchanged in November and December and were the highest annual rates for these classes since early 2009.
·       Average petrol prices stood at 145.8 pence per litre in December 2021, compared with 114.1 pence per litre a year earlier. The December 2021 figure was unchanged from November and was the highest recorded average price. A year earlier, in December 2020, autumn movement restrictions eased in the run-up to Christmas and average petrol prices began to pick up once again, increasing 1.5 pence per litre on the month.
·       Cumulatively, used car prices had grown 28.0% since January 2021. By comparison they grew 7.3% over the same period in the previous year.

The YOY inflation rates for goods and services in December were 6.9% (6.5% in November) and 3.4% (3.2% in November) respectively (table 4). The core rate inflation (excluding energy, food, alcoholic beverages & tobacco) rose to 4.2% (4.0% in November).

 

Source: ONS, “Consumer price inflation, UK: December 2021”, 19 January 2022. CPIH is the Consumer Prices Index including owner-occupiers’ housing costs and is the ONS’s preferred measure of consumer prices inflation.

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Annual earnings growth slips in three months to November
18 January 2022

Annual growth in average total pay (including bonuses) was 4.2% and regular pay (excluding bonuses) was 3.8% among employees for the three months to November 2021 (table 1). The ONS explained that previous months’ strong growth rates were affected upwards by base and compositional effects. But these temporary factors had largely worked their way out of the latest growth rates, though “…a small amount of base effect for certain sectors may still be present”.

In real terms (inflation adjusted) total pay grew at 0.4%, whilst regular pay was flat. Single-month growth in real average weekly earnings for November 2021 fell on the year for the first time since July 2020, at negative 0.9% for total pay and negative 1.0% for regular pay.

Average total pay growth for the private sector was 4.5% in September to November 2021, while for the public sector, it was 2.6%. All sectors saw growth, with the finance and business services sector seeing the largest growth rate at 6.8%. The ONS commented that “…since the end of 2019, the public sector has generally had stronger growth than the private sector. However, since April 2021, the year-on-year comparison with a low base period has meant the private sector now shows stronger growth”.

Table 1 Growth in employee earnings (YOY, %), 3 months to November 2021

 

Nominal

Real

Actual:

 

 

·                 Total pay (including bonuses)

4.2%

0.4%

·                 Regular pay (excluding bonuses)

3.8%

0.0%

 

 

 

Sources: (i) ONS, “Labour market overview: January 2021”, 18 January 2022; (ii) ONS, “Average weekly earnings in GB: January 2022”, 18 January 2022.  

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Vacancies at a record high in the three months to December
18 January 2022

UK vacancies in the three months to December rose to a new record high of 1,247k, and were 462k above their pre-pandemic January to March 2020 (2020Q1) level. Most industries displayed record numbers of vacancies, with the largest increase seen in human health and social work which was up 26,800 (14.9%) to a new record of 206,000. However, the rate of growth in vacancies continued to slow down.

Insight into trends in December 2021 are provided by two experimental sources: single-month vacancy estimates (Dataset X06) and with regional vacancy information Adzuna’s online job advert estimates. Both sources displayed falls in December 2021. However, neither series is seasonally adjusted when compared with the three-month vacancy estimates.

Sources: (i) ONS, “Labour market overview: January 2022”, 18 January 2022; (ii) ONS, “Vacancies and jobs in the UK: January 2022”, 18 January 2022.

 

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Labour market
further signs of recovery
18 January 2022
The latest data suggest that the labour market is continuing to recover. The furlough scheme (Coronavirus Job Retention Scheme) ended on 30 September. 

Firstly, early estimates from Pay As You Earn Real Time Information (PAYE RTI, HMRC data) show the number of payroll employees increased by 184,000 (MOM, on the heavily revised November figure) to 29.5mn in December, some 409,000 more than in pre-pandemic February 2020. All regions are now above pre-coronavirus levels, with Scotland having the largest percentage increase on the month.

Secondly, turning to the data for the three months to November (LFS data), employment increased in the quarter, whilst the unemployment rate fell. But total hours slipped a little and the economic inactivity rate was a tad higher.

Concerning employment (including the number of people temporarily away from work, including furloughed workers) and hours in the three months to November:
·       Employment rose by 60,000 (QOQ) to 32.475mn and was 171,000 higher YOY. The number of part-time workers decreased strongly during the coronavirus pandemic, but has been increasing since April to June 2021, driving the quarterly increase in employment.  
·       The employment rate (the proportion of people aged 16-64 who were in work) was 75.5%, 0.2 percentage points higher QOQ and 0.5 percentage points higher YOY.
·       But total actual hours worked decreased by 2.6mn hours in the quarter to 1,018.7mn, to be 45.3mn higher YOY. However, this was still 33.5mn hours below pre-pandemic levels (the three months to February 2020) (table 1, employment press release).


Concerning unemployment and redundancies in the three months to November:
·       Unemployment fell by 128,000 (QOQ) to 1.38mn and was 356,000 lower YOY. Unemployment measures people without a job who have been actively seeking work within the last four weeks and are available to start work within the next two weeks.
·       The unemployment rate (the proportion of the labour force that were unemployed, aged 16+) slipped to 4.1%, 0.4 percentage points lower QOQ and 1.0 percentage points down YOY.
·       The inactivity rate (the proportion of people aged 16-64 who were economically inactive) was 21.3%, 0.2% higher (QOQ) and 0.3 percentage points higher YOY. It was 1.0 percentage points higher than pre-pandemic 3 months to February 2020.
·                 The number of redundancies fell by 21,000 (QOQ) to 78,000 and was 323,000 down YOY. The redundancy rate decreased to a record low following the end of the Coronavirus Job Retention Scheme.

The ONS pointed out that young people (those aged 16 to 24 years) had been particularly affected by the pandemic, with the employment rate decreasing and the unemployment and economic inactivity rates increasing by more than seen for those aged 25 years and over. Over the last quarter, however, there had been an increase in the employment rate and a decrease in the unemployment rate to below pre-coronavirus rates. The inactivity rate for young people also decreased compared with the previous three-month period.

Sources: (i) ONS, “Labour market overview: January 2022”, 18 January 2022; (ii) ONS, “Earnings and employment from Pay As You Earn Real Time Information, UK: January 2022”, 18 January 2022; (iii) ONS, “Employment in the UK: January 2022”, 18 January 2022. The unemployment rate can also be defined as the proportion of the economically active population (those in work plus those seeking and available to work) who are unemployed.

 

 

 

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