Economic Perspectives –
Job losses: sharpest in the consumer-facing sectors and the youngest age groups
The latest Perspective from Ruth Lea CBE, Economic Adviser to Arbuthnot Banking Group.
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest UK labour market data:
- According to the HMRC’s Pay As You Earn (PAYE) data, the number of pay-rolled employees in February 2021 was some 693,000 less than a year earlier.
- The consumer-facing industries of accommodation and food, arts and entertainment and retail experienced the sharpest falls in employment, whilst employment rose in public administration and health and social care.
- The youngest age groups experienced the sharpest falls in employment. There was a 436,800 decline in the under-25s, around 63% of the total annual fall of 693,000.
- There were also large regional differences in the PAYE data. Decreases in pay-rolled employees ranged from 0.9% in Northern Ireland to 5.0% in London.
- The PAYE data for non-UK nationals showed an 184,000 YOY fall in 2020Q4 for EU nationals but a marginal rise (6,000) for non-EU nationals. The ONS commented that the Labour Force Survey (LFS), which showed significantly larger falls for non-UK nationals, may overstate the change in the non-UK population.
- Other labour market data showed the unemployment rate was 5.0% in the three months to January, 0.1 percentage points high QOQ and 1.1 percentage points higher YOY.
- The annual growth in average earnings rose to 4.8% for total pay (including bonuses) and to 3.9% for regular pay (excluding bonuses) in the three months to January. The ONS pointed out that the growth was partly driven by compositional effects of a fall in the number and proportion of lower-paid employee jobs. Allowing for compositional changes, the ONS estimated underlying wage growth of around 3% for total pay and around 2.5% for regular pay.
Other news included:
- Consumer prices annual inflation fell to 0.4% in February, reflecting falling prices for clothing and second-hand cars, which were only partly offset by higher fuel prices.
- Producer prices inflation, however, picked for both output and input prices.
- According to the ONS, house prices inflation slipped to 7.5% in January, compared with December’s 8.0%.
- Retail sales only partly recovered in February, rising by 2.1% (MOM) after January’s 8.2% fall. The proportion spent online increased to 36.1% in February 2021, the highest on record.
- The Markit/CIPS flash UK Composite Output Index picked up to 56.6 in March, compared with February’s 49.6, suggesting a return to growth, led by recovery in services sector.
- The Markit flash index for the Eurozone also indicated a return to growth in March, with the German recovery notably stronger than that of France.
- The Markit flash index for the US registered a further substantial increase in business activity in March.
- The Government released over 30 policy documents and consultations on 23 March, “Tax Day”, including a consultation on Air Passenger Duty (APD), tighter tax rules for second property owners and the interim report on the review of Business Rates.
Ruth Lea said “Even though the labour market in general continues to be generously supported by the furlough scheme, there are clearly parts of the labour market that have contracted significantly over the past year. Unsurprisingly, consumer-facing industries have been hard hit. Young people, too, have been severely affected, partly reflecting difficulties experienced by school leavers and graduates in gaining employment during the pandemic, as well as the fact that hospitality and retail, which employ a large number of youngsters, have been disproportionately affected by the lockdowns.”
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