regular update from John Bridge OBE DL

Labour market statistics: August 2020

The labour market statistics released yesterday showed a continuation of recent trends, with a fall in employment and significantly reduced hours of work as many people are furloughed.

Figures from the main survey show there has been a rise in people without a job and not looking for one, though wanting to work. In addition, there are still a large number of people who say they are working no hours and getting zero pay.

The falls in employment are greatest among the youngest and oldest workers, along with those in lower-skilled jobs.

Vacancies numbers began to recover in July, especially in small businesses and sectors such as hospitality, but demand for workers remains depressed.

You can read the main points here.  

In respect of the information regarding the labour market in the regions of the UK you can read the release on these here.  

However the picture I see is that the headline data continues to lag behind the reality on the ground, the decline in the number of employees on payrolls and hours worked is further evidence of the damage being done to the UK labour market by the Coronavirus pandemic.

The furlough scheme has been successful in preserving millions of jobs. However, with firms continuing to face a perfect storm of increased costs, reduced demand, and diminished cash reserves, unemployment is likely to surge as the government support schemes wind down, unless action is taken.

A significant spike in job losses would be a major drag on any recovery, stifling consumer spending and reducing the productive capacity of the UK economy.

As we have stated before, to help businesses recruit and retain staff more needs to be done to reduce the overall cost of employment and prevent substantial redundancies. This could include significant expansion of the Employment Allowance and a cut in employer National Insurance Contributions.

Coronavirus (COVID-19) roundup: Economy, business and jobs

You can catch up on the latest data and analysis related to the coronavirus (COVID-19) pandemic and its impact on the economy, business and jobs here

GDP Monthly Estimate for the UK: June 2020

Figures released today which were not unsurprising show:

• UK gross domestic product (GDP) is estimated to have fallen by a record 20.4% in Quarter 2 (Apr to June) 2020, marking the second consecutive quarterly decline after it fell by 2.2% in Quarter 1 (Jan to Mar) 2020.

• When compared with Quarter 4 (Oct to Dec) 2019, UK GDP decreased by 22.1% in Quarter 2 2020.

• Despite the weakness in Quarter 2 2020, there was some pick up in June as government restrictions on movement started to ease; see GDP monthly estimate , UK: June 2020. 

• There have been record quarterly falls in services, production and construction output in Quarter 2, which have been particularly prevalent in those industries that have been most exposed to government restrictions.

• Private consumption accounted for more than 70% of the fall in the expenditure measure of GDP in Quarter 2 2020, falling by 23.1%; there were also notable falls in gross capital formation and government consumption.

This identifies the UK suffered an historic contraction in economic activity in the second quarter as the coronavirus closed large parts of the economy. The dominant services sector suffered particularly badly in the quarter, with consumer-focused firms hit hardest by the pandemic.

While there was a pick-up in activity through the quarter from the historically weak April out-turn, this is more likely to reflect the release of pent-up demand as the economy gradually opened, rather than an indication of a sustained revival.

With restrictions steadily easing, the second quarter is likely to prove to be the low point for the UK economy. However, the prospect of a swift ‘V-shaped’ recovery remains remote as the recent gains in output may fade over the coming months as the economic damage caused by the pandemic increasingly weighs on activity, particularly as the government support measures wind down.

Against this backdrop, bold action is needed to immediately inject confidence back into the UK economy.

You can find details of the release by the Office of National Statistics here.  
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