ONS releases ‘experimental estimates’ for labour market ahead of interest rate decision
ONS released ‘experimental’ unemployment figures in October, due to low response rates to its Labour Force Survey (LFS). The new release shows that unemployment rate reached 4.2% and pay growth slowed down as employment levels continued to fall.
Labour Market Economist Julius Probst commented:
The fact that the ONS had to pause the labour force survey is deeply concerning because policy makers, including at the Bank of England, rely on that data for decision-making. While the ONS published an ‘adjusted experimental unemployment rate’, which stands at 4.2%, the truth of the matter is that we are currently stabbing in the dark during a critical time for the labour market. We cannot have strong confidence in these latest numbers. Job postings show that hiring is slowing down. For the time being, we need to consult alternative data like job postings and the HMRC payroll employment numbers to see the extent of the labour market slowdown. At Totaljobs and The Stepstone Group, we will continue to share our insights with business, recruitment and HR leaders across the UK.
Julius ProbstEuropean Labour Economist
ONS has delayed its October data release by a week due to low response rates to LFS, but the picture of a loosening UK labour market remains unchanged.
With unemployment rising and vacancies declining, the UK’s productivity is set to slow down as well. Businesses are therefore prioritising retention and hiring specialists.
On a positive note, experts are expecting the Bank of England to hold interest rates at 5.25% once more due to the loosening labour market.
Key findings from the ONS data
- Employment in the UK stands at 75.7% according to experimental estimates, which is lower than the previous quarter.
- Experimental data shows that unemployment reached 4.2% in Q3, 0.2 percentage points higher than Q2.
- Early estimates for September 2023 indicate that median monthly pay increased by 5.7%, which shows a slowdown in wage growth.
- Vacancies kept falling for the 15th consecutive period in July to September 2023, now below a million – which is still higher than pre-pandemic levels.
- The labour market has clearly loosened, but finding the right talent remains a challenge for businesses as average time to hire increased again from 5.8 weeks to 6.1 weeks in Q3.
- According to Totaljobs data, applications per vacancy are at a record high.
Employee retention is becoming a priority
With more workers available than before, unemployment is on the rise. The unemployment rate reached 4.2% in Q3, and hiring has slowed down. Yet these are provisional figures, as ONS’ methodology has changed.
Similarly, payroll employment fell by 11,000 in September to 30.1 million. However, businesses are holding onto talent and still offering pay rises despite a cooling market. Pay growth in the three months to August was up 7.8% year on year.
Pensioners returned to the workforce
With the rise in cost of living, the economic inactivity had been declining. However, it increased in the period from May to July. This was driven by those aged 16 to 24 years, but it was also partially offset by a decrease among those aged 25 to 64 years.
According to ONS, since 2019, the number of payrolled employees aged 65 years and over increased faster than the UK as a whole, coinciding with the increase in State Pension age.
Totaljobs’ overview of the recruitment landscape
Our latest Hiring Trends Index (Q3 2023) takes an in-depth look into the economic outlook of the UK with a focus on green jobs. This edition provides an understanding of the demand for green jobs and skills by businesses and candidate attitudes regarding green employers.
According to our data;
- More than a third (36%) of businesses increased recruitment in the third quarter of 2023.
- 59% of businesses are confident they will recruit the people they need in Q4 2023, rising from 53% reported in Q4 2022.
- According to Totaljobs data, despite a general slowdown in hiring, the demand for green roles continues to increase (677% between 2019 and 2023).
- Over 1 in 5 (23%) companies are increasing the number of green roles within their business.
- Over half (58%) of companies have or are in the process of implementing a sustainability framework. Among businesses that have already established one, 84% report that their company has experienced benefits.
- The average time to hire stands at 6.1 weeks, which is lower than 6.4 weeks at the beginning of the year.
Totaljobs’ Hiring Trends Index rounds up the latest quarterly insights from the UK labour market and provides a first look at what’s happening in recruitment. In this edition, we look at the third quarter of 2023 with a focus on sustainability and green roles.
- Read our Hiring Trends Index to learn more about the demand in green roles and skills, and candidate expectations from employers when it comes to sustainability.