UK Employment data springs a surprise again in the Month of January 2020

The employment data of United Kingdom has surprised again. The data released on 21 January 2020 by the Office of National Statistics has confirmed growth for the second consecutive month. While in the month of December 2019, employment data in the country showed signs of some improvement, it was termed by many as a sign of temporary euphoria on account of Boris Johnson’s win in the general elections. The new data not only point to an increase in economic activity in the country but have also come out with some interesting figures on the employment mix between male and female employees and permanent and temporary employments.

The new data could very likely affect the decision of Bank of England, which is to take a call on reducing rates on 30 January 2020. The data, which is also largely indicative of how the British industry perceives the forthcoming period to be, could be the sign that the central bank is looking for to avoid a rate cut. Â The central bank had in the past one year adopted a loose monetary policy so as to spur growth in the British economy which had been battered during the past couple of years on account of Pre-Brexit jitters. Â The economy, however, was moving little on account of extensive depressive sentiments donning the British psyche at that time, to the effect that no amount of stimulus was having any impact. At the beginning of 2020, the outgoing governor of Bank of England, Mark Carney, had stated that the bank is contemplating a rate cut on account of the continued weakness of the British economy. A week prior to this, however, he had warned that given the amount of liquidity in the world markets, it could end up putting the world economy into a liquidity trap accentuating the dilemma the central bank had been facing at the time.

This new employment data is many among the host of leading economic indicators that have started to trend positively since the December 2019 general elections. The consumer confidence index, the credit off take data, banking transaction growth, housing prices growth data are some of the prime examples of how things are turning out in the new year. The first indications of this change, which started showing with the passing of the Benn Act by the British parliament, continued with the postponement of the tentative Brexit date to 31 January 2020 and finally culminated with the victory of Prime minister Boris Johnson who secured a comfortable majority in the general elections. Â This momentum is expected to get a fresh impetus when the Brexit event finally comes to pass on 31 January 2020. All the above indicators, suddenly springing up to trend in the positive, on the trigger of positive news flow, shows that all along this period there was a pent-up demand building up within the economy which is now getting released. This pent-up demand could, in effect, have a short term to mid-term effect on the British economy which could see an increased amount of employment and business activity. A rate cut in this event is not only highly desirable but could also end up unnecessarily festering inflationary forces which could, in the long run, cause structural defects in the British economy. The employment data this time around is indicating that unemployment is at a forty-year low in the country, meaning that further rate cuts could lead to inflation.

Among the major interesting facets, that this data release has revealed and is worth noting, is the proportion of woman entering the workforce. The employment rate in the United Kingdom stood at 76.3 per cent, which was 0.6 per cent higher than what it was in the previous year. The employment among men stood at 80.4 per cent which is 0.1 per cent higher compared to last year and the employment among woman was at 72.3 per cent which is a record 1.1 per cent higher than what it was last year. In the statistics of full time and part-time employment, the number woman of working age in full-time employment has increased faster in the past five years and at a much faster pace than men of working age in full-time employment during the period. Part-time employment has steadily been on the decline over the period with part-time employment among woman at less than 2 per cent during the last quarter of 2019 and nil among men during that period in the United Kingdom. The seasonally adjusted employment data among various age groups were as follows- men aged between 25 and 64 exhibited the maximum growth in employment during the period followed by women aged between 25 and 64 having the second-highest employment growth rate. In the 16 to 24 and 65 and above age categories, employment among men saw the sharpest fall to less than zero during the five-year period while employment among women in that age group trended just above zero but below the one per cent towards the end of the stated period.

The total hours worked by women have steadily increased during the period while the number of hours worked by men have over the period remained the same. The unemployment rate in the United Kingdom, which peaked during the period of 2008 era financial crisis, has steadily declined after that and now is close to 3.8 per cent which is close to the unemployment rates of the 1970s. The unemployment rates among men stands at 4.1 per cent and 3.6 per cent among women.

The new year is set to bring in a new set of circumstances for the British economy. There are several sectors that are going to require increased number of personnel due to a shortage of labor on account of Brexit. The retail sector, the hospitality sector and especially the banking and financial services sector will see enhanced need for trained and untrained manpower. With the restriction on the movement of goods from other countries, there will also be an increased demand for manpower in the manufacturing sector as well, which will have to be met through internal sources.

The British economy is about to enter into an age of transformation. The Brexit day of 31 January 2020 will bring about a new set of economic and business realignments and old realignments will be broken. The possibilities that this could entail for the country and its people are endless. The transformative changes will bring about the requirements for new skillsets that the British people will have to acquire in short to mid-term. The changed set of circumstances would also mean more competitiveness which would entail enhancement in both the quality and quantity of work being rendered by average employees of the country. The country will have to rapidly retrain its labor force in order to adapt to these changed set of circumstances quickly.

The employment rate in the United Kingdom in the next four to six months at least will grow owing to the pent-up demand within the economy. The economy as a whole is also most likely to perform better if only the domestic situation in the United Kingdom is taken into consideration. However, the global macro-economic situation could have an impact on the way the British economy emerges out of the Brexit event in the post 31 January 2020 era.