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Employment hits new record but productivity stays weak

By Sean Farrell

Date: Tuesday 18 Feb 2020

Employment hits new record but productivity stays weak

(Sharecast News) - UK employment rose to a record high in the fourth quarter of 2019 but productivity growth remained weak, official figures showed.
The employment rate for the three months to the end of December rose 0.6 percentage point from a year earlier to reach a new peak of 76.5% the Office for National Statistics said. Unemployment fell 0.2 point to 3.8%, in line with expectations.

The number of people aged 16 or more in employment rose 336,000 from a year earlier to a record 32.93m. Job vacancies increased by 7,000 to 810,000 from the previous quarter but the number of available jobs was 50,000 fewer than a year earlier.

Earnings growth slowed to 2.9% from 3.2% meaning annual growth in total pay was 1.4% adjusted for inflation. Regular earnings have now risen above the level before the financial crisis of 2008.

The increase in employment was driven partly by more women working. The employment rate for women rose 1 percentage point from a year earlier to a record 72.4% compared with a 0.2 point rise for men.

The ONS's deputy head of labour market statistics Myrto Miltiadou said: "Employment has continued its upward trend, with the rate nudging up to another record high. In particular, the number of women working full-time grew strongly over the past year. The number of job vacancies has also increased on the quarter, after falling for most of last year."

Employment has continued to rise in the UK despite faltering economic growth during the political turmoil over Brexit. Some commentators have argued this is partly caused by companies hiring workers who can be fired instead of committing to long-term investment in equipment and technology.

The first estimate of productivity for the quarter showed output per hour rose 0.3% from a year earlier but no growth in output per worker. The ONS said productivity had moved very little over the past 18 months and that growth remains much slower than before the recession of 2009.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the job figures slightly disappointing but that vacancies and wages are likely to pick up after a post-election boost to surveys. The Bank of England's monetary policy committee is likely to hold off action on borrowing costs, he added.

"With productivity set to be constrained by recent weakness in business investment, growth in unit wage costs looks set to remain strong enough for the MPC to hold back from cutting bank rate this year," Tombs said.


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