The economic lesson of the week is that headlines are often deceiving. Yesterday’s GDP update for the month of April showed a 0.3 percent contraction – but that was largely due to the rollback of state-funded programmes designed to tackle Covid-19. Now today’s employment updates show the headline employment rate up – to 75.6 per cent – and the headline unemployment rate largely unchanged for the three months leading up to April. But is the labour market as ‘tight’ as these numbers suggest?
In the short-term, Britain’s workforce seems stable. While prices spiral and growth remains largely stagnant, there are no immediate signs of rising unemployment. And the chunk of the population not working – the economically inactive – softened to 21.3pc, down 0.1 points. Still well above pandemic levels, but heading in the right direction.
It’s expected that knock-on effects of inflation will hit the labour market as some point.
However, this small dip was deceptive: largely due to a change in studying status for students.
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