The UK unemployment rate stood at 3.7% in the three months to January, according to figures released by the Office for National Statistics (ONS) this morning. This was unchanged on the previous three-month period, ending in October. Indeed, the unemployment rate has remained constant for each of the last four readings. This measure is currently down by 0.3 percentage points on pre-pandemic levels. Meanwhile, the employment rate was up by 0.1 percentage point on the previous three-month period, reaching 75.7%, and was down by 0.8 percentage points on its pre-pandemic level.
A feature of the UK labour market since the onset of the Covid-19 pandemic has been an elevated inactivity rate. Having stood at 20.2% in the three months to February 2020, this metric witnessed a stark upward trend, reaching 21.7% in the three months to August 2022. Since then, however, the beginning of a gradual decline has been witnessed, which continued in the latest data. The inactivity rate stood at 21.3% in the three months to January, down by 0.2 percentage points on the quarter. This continued decline was predominantly driven by younger people, particularly students entering the labour market. There remain significant numbers of inactive individuals, however, with people classed as long-term sick making up the largest share. Given that this elevated rate of economic inactivity constrains labour supply, it can be seen as one reason behind the UK’s weak growth performance at present. The Chancellor is expected to announce measures to deal with this issue at Wednesday’s Budget.
Read the full article.