Labour Market Statistics, January 2024

This briefing note sets out analysis of the Labour Market Statistics published this morning. As with last month, there is no Labour Force Survey (LFS) data published today as this has been withdrawn by the ONS due to concerns around its reliability. The ONS is now intending to publish revised LFS estimates with next month’s release (February 2024). In the meantime, the ONS is using ‘experimental’ data to estimate employment, unemployment and economic inactivity, with this derived from HMRC Pay As You Earn (PAYE) data and the Claimant Count. This is set out in Figure 1 and covers the period to November 2023.

In addition, today’s briefing covers data from the ONS Vacancy Survey and the Monthly Wages and Salaries Survey, which are both business surveys collecting data on unfilled vacancies and weekly pay respectively. The Vacancy Survey includes data up to December 2023, and the Wages and Salaries Survey to November 2023.

Could the economy be heading for a soft landing?

Today’s figures show the labour market continuing to cool down, with vacancies falling by a further 50 thousand on the quarter (to 935 thousand) and earnings growth dipping below 6%. However they also show an unexpected slight improvement in the estimated employment rate, driven by falling ‘economic inactivity’ (the measure of those outside the labour force and not looking and/ or not available for work). Combined with decent GDP estimates last week, and likely further falls in inflation tomorrow, these are all positive signs.

However, there are important reasons to be cautious too. Firstly, there remains significant uncertainty around labour market data – and in particular, estimates of employment, unemployment and economic inactivity are based on underlying population figures that have been subject to significant revision and are currently under review. Secondly, the employment rate remains below where it was before the pandemic and earnings have barely reached where they were fifteen years ago. And thirdly, higher living costs (and more people facing higher mortgage repayments as fixed terms expire) will continue to dampen demand and weaken growth in the year ahead. So even if we avoid a recession, there remains a lot of ground to make up in the recovery.

Hopefully next month’s release should see publication of revised Labour Force Survey estimates and enable us to better understand recent trends. In the meantime though, today’s figures appear broadly positive, and are welcome news to start the year.