The UK’s unemployment rate for the period from June to August 2023 show a 0.2% increase when compared with the previous quarter (March to May 2023). The unemployment rate totalled 4.2%, according to ‘experimental’ estimates from the Office for National Statistics.

Because of the increased uncertainty around the Labour Force Survey (LFS) estimates, the ONS published yesterday an alternative series of estimates of UK employment, unemployment, and economic inactivity as experimental statistics. The experimental figures were derived using growth rates from Pay as You Earn Real-Time Information and the Claimant Count for the periods from May to July 2023 onwards.

According to the Financial Times, the ONS was unable to publish the usual set of figures because of worsening problems with its survey. The response rate to the survey has fallen since the pandemic to levels where its results are no longer reliable, with a divergence in recent months from other data sources.

The agency warned these estimates should be treated as ‘experimental’, since they were for the first time derived from tax records and benefits claims, rather than the labour force survey on which its figures are usually based.

Commenting on the new experimental process, Adam Pode, Director of Research for EMEA & APAC at SIA, said “Deriving trends from survey data, as the ONS shows, is increasingly difficult. Plus, we have always had problems looking at the old data as it relates to the number of temporary agency staff as the ONS allows respondents to self-identify which category they fall into. A new experimental approach is to be welcomed, but only so long as we can correlate the new numbers to what has been produced previously and if the new methodology is not at odds to similar calculations from other countries.

Further experimental estimates from the ONS showed the unemployment rate rose from 3.5% the year prior.

At the same time, the data to August 2023 show a 0.3% decrease in the UK employment rate to 75.7% compared with the previous quarter (March to May 2023).

Experimental estimates for June to August 2023 show a 0.1% increase in the UK economic inactivity rate to 20.9% compared with the previous quarter (March to May 2023).

In the July to September 2023 period, the estimated number of vacancies in the UK fell by 43,000 on the quarter to 988,000. Vacancies fell on the quarter for the 15th consecutive period, with vacancies falling in 14 of the 18 industry sectors. 

Further data from the ONS showed that annual growth in regular pay (excluding bonuses) was 7.8% in June to August 2023, similar to recent periods and one of the highest regular annual growth rates since comparable records began in 2001.

Annual growth in employees' average total pay (including bonuses) was 8.1%. This total annual growth rate is affected by the NHS and Civil Service one-off payments made in June, July, and August 2023.

In real terms (adjusted for inflation using Consumer Prices Index including owner occupier's housing costs (CPIH)), annual growth for total pay rose on the year by 1.3%, and regular pay rose on the year by 1.1%.

Meanwhile, there were 119,000 working days lost because of labour disputes across the UK in August 2023. The majority of the strikes were in the health and social work sector.

Neil Carberry, REC Chief Executive, said, “Throughout 2023, the jobs market has been normalising after the post-pandemic boom. While vacancies are dropping, they remain above their levels of 2019. But sector demand is varying widely, and workers are facing having to make more transitions to new areas to find new roles. This transition is a primary driver of rising unemployment – though it is still low by historic standards.”

“With pay growth at levels not seen for many years, firms will be concerned at the prospect of having to find resources for a second year of significant wage settlements, given low economic growth this year,” Carberry added. “Businesses can ensure they get the best outcome by ensuring they use their whole benefits package and workplace culture to attract and retain staff, taking advice from their professional recruiters.”  

On data issues, Carberry said, “We should be careful about drawing conclusions from this experimental data set, which may be prone to fluctuations as it develops. The Labour Force Survey remains the best official monthly guide to the performance of the jobs market, and it is essential that ONS resolves concerns about it as quickly as possible.”

Carberry added, “We know from recent ONS data that economic inactivity is an issue for 16 to 24 years old, who can fall out of education and not find work quickly. We need better and more fixed pipelines into work for young people to land them in what remains a welcoming jobs market.”