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| Labour market unaffected by Brexit vote ... for now Labour market unaffected by Brexit vote ... for now | |
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| Record levels of employment. Plenty of jobs to be had but generous pay rises hard to come by. Britain’s labour market after the EU referendum looks a lot like it did before the Brexit vote. Anybody looking at the latest unemployment numbers would be hard-pressed to conclude there had been an in-out referendum on EU membership less than three months ago. | Record levels of employment. Plenty of jobs to be had but generous pay rises hard to come by. Britain’s labour market after the EU referendum looks a lot like it did before the Brexit vote. Anybody looking at the latest unemployment numbers would be hard-pressed to conclude there had been an in-out referendum on EU membership less than three months ago. |
| The latest data from the Office for National Statistics provide little evidence of any major disruption to the labour market either before or after 23 June. In the three months to July, there were 174,000 more people in work than in the previous three months, while the number unemployed fell by 39,000. The unemployment rate remained unchanged at 4.9%. | The latest data from the Office for National Statistics provide little evidence of any major disruption to the labour market either before or after 23 June. In the three months to July, there were 174,000 more people in work than in the previous three months, while the number unemployed fell by 39,000. The unemployment rate remained unchanged at 4.9%. |
| Perhaps unsurprisingly, the ONS figures are making economists more cautious in their assessments of the impact of the Brexit vote on the economy. | Perhaps unsurprisingly, the ONS figures are making economists more cautious in their assessments of the impact of the Brexit vote on the economy. |
| “Our first look at the post-Brexit-vote labour market shows a similar picture to the one we had before the vote,” said Laura Gardiner of the Resolution Foundation thinktank. “It could be some time before we see any ‘Brexit effects’ – good or bad – in the official figures.” | “Our first look at the post-Brexit-vote labour market shows a similar picture to the one we had before the vote,” said Laura Gardiner of the Resolution Foundation thinktank. “It could be some time before we see any ‘Brexit effects’ – good or bad – in the official figures.” |
| John Philpott, who runs the Jobs Economist consultancy, has a similar take. While noting that it is still early days, he concludes that the economy has so far shrugged off concern about Brexit. He said any negative impact on jobs would “emerge as a slow burn over the next two to three years rather than as a big immediate jobs shake-out and offers some hope that the overall impact might prove to be smaller than first feared”. | John Philpott, who runs the Jobs Economist consultancy, has a similar take. While noting that it is still early days, he concludes that the economy has so far shrugged off concern about Brexit. He said any negative impact on jobs would “emerge as a slow burn over the next two to three years rather than as a big immediate jobs shake-out and offers some hope that the overall impact might prove to be smaller than first feared”. |
| Philpott is right. Unemployment has not rocketed since the referendum. Surveys suggest employers are warier about hiring new employees but they have yet to stop doing so. There is little to suggest unemployment will start rising by 50,000-plus per month, which is what it tends to do in the early stages of a recession. | Philpott is right. Unemployment has not rocketed since the referendum. Surveys suggest employers are warier about hiring new employees but they have yet to stop doing so. There is little to suggest unemployment will start rising by 50,000-plus per month, which is what it tends to do in the early stages of a recession. |
| The slow burn effect is most likely to come through the low level of earnings growth. All things considered, it is hard to see why employers should be offering higher pay in the aftermath of the referendum than they were in the period before it. That means average earnings growth will remain stuck at around its current level of 2-2.5% a year. | The slow burn effect is most likely to come through the low level of earnings growth. All things considered, it is hard to see why employers should be offering higher pay in the aftermath of the referendum than they were in the period before it. That means average earnings growth will remain stuck at around its current level of 2-2.5% a year. |
| For the moment, consumers are seeing increases in their real incomes because wages are rising faster than prices. But inflation is expected to drift higher over the next year and this will lead to a squeeze on living standards. That doesn’t mean the economy is going to crash. But in the absence of further stimulus from the Bank of England and some support from the chancellor in the autumn statement, it could well slow a bit. | For the moment, consumers are seeing increases in their real incomes because wages are rising faster than prices. But inflation is expected to drift higher over the next year and this will lead to a squeeze on living standards. That doesn’t mean the economy is going to crash. But in the absence of further stimulus from the Bank of England and some support from the chancellor in the autumn statement, it could well slow a bit. |