Increase in claimant count is cause for concern – ITEM Club comments on today’s labour market figures

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Nida Ali, economic advisor to the EY ITEM Club, comments on today’s labour market figures:

  • May's increase in the claimant count is a cause for concern and reflects renewed weakness in the UK economy
  • But it’s encouraging to see that job creation in the private sector offset the sharp fall in public sector employment

“The recent improvement in the labour market seems to have reversed. May's increase in the claimant count is a cause for concern and reflects renewed weakness in the UK economy. The less timely ILO figures remained upbeat, but this is likely to be because of the encouraging outturns in the first quarter.
 
“However, on a brighter note, job creation in the private sector in Q1 more than offset the sharp fall in public sector employment. This is a very welcome development and casts further doubt over the official GDP figures, supporting our view that upward revisions to GDP are on the cards.
 
“Pay growth continues to remain sluggish. Even though inflation is starting to ease rapidly, wage growth at just 1.8% suggests that it will be some time before households' real incomes start to rise.