The fall in UK unemployment revealed this week is great news – but I have to say it all leaves me a bit puzzled.
We heard that unemployment between April and June this year fell by 46,000 to 2.56 million and the number of people in work rose by 201,000.
Figures from the Office for National Statistics show the unemployment rate fell to 8.0 per cent in the quarter, down from 8.2 per cent in the previous quarter.
There were also improvements in the number of young people out of work, with 1.01 million people unemployed, down 4,000 from the three months to March.
The fall in unemployment and rise in employment is to be welcomed. It offers something – a mere sliver of hope maybe – and is bound to send some confidence vibes around business.
But here’s the rub: employment rose by 201,000 in the three months to June – but this is also a period in which our national output is supposed to have shrunk, by 0.7 per cent, following a three per cent contraction earlier in the year.
So the positive employment landscape is welcome news indeed – but it is offset by the state of the economy.
Indeed, does anyone know the answer to this puzzle?
It’s possible, of course, that the figures are wrong. The ONS figures were always estimates, not concrete stats, and the number could be revised later this month, to show the economy actually contracted by 0.5 per cent, not 0.7 per cent.
David Kern, chief economist at the British Chambers of Commerce, said this week that the labour figures are “difficult to reconcile with other ONS figures, which show three consecutive GDP declines since the end of 2011”.
“If both sets of figures are correct, they imply large declines in productivity, which seems implausible. It is my belief that this could lead to revisions to the GDP statistics in due course,” he said.
Stephanie Flanders, the BBC’s economics editor, suggested in a blog post this week that a perhaps worrying sign is that we “seem to be needing to hire a lot more people to make less stuff”.
“Even if the extra Bank Holiday also pulled down the numbers temporarily, we’d still be looking at a flat economy, which somehow produced more than 200,000 jobs,” she said.
At the moment, it seems – no one seems to know.