The ONS’ latest UK employment figures covering the three month period in the run up to the EU referendum show positive movement, with the employment rate at its highest since records began in 1971.
Between April and June, the number of people in work grew by 172,000 to reach a total of 31.75 million, of which 23.22 million were in full-time employment, and the remaining 8.53 million were working part time.
All in all, this brought the employment rate – the portion of 16-64 year olds currently in work – to 74.5%, a new record high.
The unemployment rate – the portion of 16-64 year olds not currently working but seeking work – fell slightly to 1.64 million for April to June, down 52,000 from the previous quarter, remaining at close to 4.9%. In raw terms though, this is the lowest it’s been since the three month period covering March to May 2008.
There are 140,000 more unemployed men than women, but the unemployment rate among men fell faster from April to June than it did for women.
These figures cast some doubt over predictions that the labour market was going to take a hit in the run up to (and aftermath of) the EU referendum, as companies were expected to exercise caution over hiring until the effects of the vote became clearer.
However, while the data shows that pre-emptive action may not have been as severe as predicted, analysts are warning against complacency, arguing that the worst is likely yet to come.
The Bank of England is still holding on to its prediction that unemployment is likely to rise as a result of the vote for Brexit, having predicted before the referendum that it would increase to 5.5% in the not too distant future.
IHS Global Insights’ Howard Archer said that is would be “premature to draw any firm conclusions from this [data set]”.
“While the data suggest that companies generally avoided a knee-jerk reaction to the leave vote by getting rid of workers, it remains likely that softening economic activity and heightened uncertainty will take a toll on the labour market over the coming months” he explained.
Indeed job vacancies for the period covering May to July this year were slightly down (by 7,000 to settle at a total of 741,000) from February to April, but, the ONS explain are “little changed compared with a year earlier”.
The ONS’ David Freeman offered a similar assessment to Archer’s – that, while the data is broadly speaking positive, it doesn’t offer too much insight into the effects of the referendum on the labour market purely because of its timing.
“The labour market continued on a strong trend in the second quarter of 2016, with a new record employment rate,” he said.
“However, little of today’s data cover the period since the result of the EU referendum became known, with only claimant count and vacancies going beyond June – to July for the former and to May-July for the latter.”
Suren Thiru at the British Chamber of Commerce also explained that traditionally speaking, the labour market reacts slower than the rest of the economy to general changes, and so the true effects of the referendum and general political change are unlikely to be known for at least a few months.
He said: “Labour market indicators tend to lag behind the wider economy, so it is likely to be some time before the full post-referendum employment picture emerges.
“However, more needs to be done to boost business confidence, so that firms can continue to grow and recruit.”