Comment: Encouraging Signs Abound in the Labour Market

Commenting on the Office for National Statistics's March release of labour market statistics, Ben Southwood, ASI Head of Policy said:

"Encouraging signs abound in the labour market: unemployment was down 63,000 in the three months to January compared to the previous three months, employment was up 105,000, economic inactivity fell 19,000, and total weekly hours worked in the economy grew 0.9m.

"Looking one month ahead, into February, the claimant count fell another 34,600 in that month, while vacancies grew 23,000 in the three months up to an including February (to 588,000) compared to the previous three.

"Even annual nominal earnings growth—heretofore the weakest piece of the puzzle—has edged up to 1.4%.

"But this labour market strength only brings the weakness in output into starker relief. With so many more workers streaming into productive employment we should be seeing growth much faster than the paltry 1.8% managed in 2013.

"This means weak productivity—something no economists has yet given a full and satisfactory explanation for—is still making up the difference. The worry is that there will be no sustained recovery until productivity growth returns."

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The Adam Smith Institute is an independent libertarian think tank based in London. It advocates liberal public policies to create a richer, freer world.