Today's labour figures are 'pretty horrendous' says ITEM Club, with the increase in unemployment worse than expected
Nida Ali, economic advisor to the EY ITEM Club, comments on today’s labour market figures:
- With 197,000 jobs lost in Q3, the scale of job losses required in the public sector seems to be greater than previously thought
- Sluggish wage growth adds credibility to the BoE’s loose monetary policy stance, but means a further squeeze on consumers’ wallets
"These figures are pretty horrendous. The increase in unemployment on the ILO measure is much worse than expected, while youth unemployment has hit the million mark. Although the rise in the claimant count has abated significantly compared to previous months, it brings little comfort given that it’s the 8th consecutive increase
"The third quarter saw 197,000 job losses. This is a massive number for just one quarter and comparable with the figures seen during the recession. We are suffering from both the public and private sectors cutting back simultaneously. By Q2, the public sector had seen a bulk of the job losses that the OBR had forecast for the 5-year period to 2015/16, suggesting that the scale of job cuts required to achieve the desired spending cuts is greater than previously thought. And we can’t expect the private sector to take up the slack with demand being so weak both at home and abroad, so it will be a long time before the labour market starts improving.
"While sluggish wage growth adds credibility to the Bank of England’s stance of loosening monetary policy, it means a further squeeze on household budgets. However, inflation is likely to ease significantly in 2012, which should allow a gradual improvement in consumers’ real incomes after a prolonged period of struggle.”