Labour market update for London – September 2018
London employment rate steady, and jobs growth in line with long-term average
Labour market data for the three-month period May to July 2018 was released today. The labour market remains healthy, with the employment rate in London near its recent record high. Jobs data for the 12 months to June 2018 was also released, and showed moderate jobs growth in London on the previous year, and a higher rate of jobs growth than in the UK overall. The sectors that added the most jobs in London on the previous year were Arts and entertainment, Information and communication, and Accommodation and food services. A ‘tight’ labour market appears to be feeding into higher nominal pay increases at the UK level, although in real terms pay growth remains low.
- In London the employment rate was 74.7%, down slightly on the previous quarter. Meanwhile the unemployment rate fell and the economic inactivity rate increased. The labour market remains strong, in both London and in the UK overall, with the employment and unemployment rates still near record highs and lows respectively.
- Jobs data was also released today, and shows moderately strong jobs growth in London over the 12 months to June 2018. There were 5.92 million jobs in London in June 2018 (a new high), up 14k on the quarter and up 88,000 on the year. The number of jobs in London grew 1.5% on the year (compared to 0.4% in the UK overall), which is slightly below the long-term average annual growth rate for London of 1.8%. Jobs growth in both London and the UK was 0.2% on the quarter.
- In terms of sectors, over the 12 months to June 2018 the sectors in London that added the most jobs were Arts and entertainment (+39k jobs), Information and communication (+34k jobs), and Accommodation and food services (+27k jobs). The sectors in London that saw the greatest job losses were Wholesale and retail (-29k jobs), Transport and storage (-27k jobs), and Construction (-18k jobs).
- Some of the growth figures over the most recent 12 months lie in contrast to jobs growth over the previous 12 months. For example, while jobs in Professional services grew by 37k between 2016 Q2 and 2017 Q2, that sector saw 1k fewer jobs in the most recent 12 months. On the other hand, the sector with the highest growth in London in the most recent 12 months – Arts and entertainment – saw job losses of a similar size over the previous 12 months.
- In terms of pay, at the UK level nominal pay growth (both regular and total pay) increased in the latest data. In the three months to June, regular pay increased 2.9 percent on the previous year. The FT reported this as showing pay growth ‘accelerating’, and confirming the Bank of England’s view that a tight labour market is now giving workers greater bargaining power and leading to higher wage growth. However, it is worth noting that in real terms (i.e. adjusting for inflation), annual pay growth in Great Britain was only 0.5% in the latest data, and pay still remains below pre-recession levels.
- Please see the charts and tables on the following pages for more detail on these data.
Note on interpreting labour market data: many of the statistics presented here (for example, the employment rate and unemployment rate) are estimates based on a survey, and as such have a margin of error. Changes in the headline indicators for London, and the gap between London and the UK as a whole, are typically within this margin of error, meaning they are not statistically significant and may not reflect real changes / differences.
Headline labour market data – employment rate, unemployment rate, and economic inactivity rate
Note: charts show seasonally adjusted data.
London’s employment rate (i.e. the proportion of London’s residents aged 16-64 population in employment) in the three months to July 2018 was 74.7%, down 0.1 percentage points on the quarter, and down 0.2 percentage points on the year. The UK’s employment rate was 0.8 percentage points higher than London’s at 75.5%, also down 0.1 percentage points on the quarter but up 0.2 percentage points on the year.
In the three months to July 2018 London’s ILO unemployment rate was 4.7%, down 0.5 percentage points on the quarter and 0.4 percentage points on the year. The UK unemployment rate was lower than London’s at 4.0%, down 0.2 percentage points on the quarter and 0.3 percentage points on the year.
In the three months to July 2018 the rate of economic inactivity in London (the proportion of 16 to 64 year olds not in work and not looking for or not able to work) was 21.6%, up 0.5 percentage points on the quarter, and up 0.6 percentage points on the year. The UK’s rate of economic inactivity was lower than London’s at 21.2%, and was down 0.3 percentage points on the quarter but unchanged on the year.
Headline labour market data for London and the UK
*All figures are seasonally adjusted. Rates are based on working age (16 – 64 male and female), with the exception of unemployment rate which is age 16+. We are no longer including a table with the claimant count (the number of people claiming unemployment benefits). The roll out of Universal Credit has caused problems with this statistic. In September 2017 we provided a briefing.
Year-on-year jobs growth, London and the UK, 1997 to 2018 Q2
Source: ONS workforce jobs
Jobs growth in London by sector, past 12 months (2017-18 Q2) and previous (2016-17 Q2)
Source: ONS workforce jobs