Gordon Brown received a boost on Wednesday after a week of almost unremitting economic gloom, with employment figures showing more people in work than ever before while numbers claiming unemployment benefit have fallen to the lowest level for more than 30 years.
The figures published by the Office for National Statistics, however, revealed small signs that the weakening economy might be starting to have an impact on a still buoyant jobs market.
Revised figures for February reported that the number of people claiming jobseekers allowance had risen for the first time for 16 months. The more normal pattern, however, was resumed last month when the claimant count resumed its persistent decline, falling by 1,200 to 794,300 to reach the lowest level since 1975.
Stephen Timms, employment minister, said that a 456,000 rise in the past year in the number of people in work, to 29.51m, was the biggest annual increase for a decade.
Vacancies of 687,600 were the highest since comparable records began in 2001, he said. Redundancies totalling 106,000 in the three months to the end of February were the lowest quarterly figure since 1990.
Lavinia Santovetti, economist at Lehman Brothers, however, said the revised increase in the claimant count in February – albeit so far fleeting – represented “a sign that a turning point may be in sight”.
Geoffrey Dicks, chief UK economist at the Royal Bank of Scotland, said that more recent monthly data, although less reliable than quarterly comparisons, pointed to “some loss of momentum” in the labour market.
“Overall, the jobs market is still going forward but at nothing like the heady and unsustainable pace of mid- 2007,” he said.
The turning point appears to have already been reached in the financial and business sectors where vacancies in the three months to the end of March fell by 3.1 per cent compared with the previous three monthly period and were 1.3 per cent lower than at the same stage a year ago, according to ONS.
This, however, does not portray the full picture, as the fall in job vacancies has been much greater in the City, where Morgan McKinley, the financial recruiters, warned last week that vacancies in the Square Mile were almost a quarter lower than at the same stage last year.
Bankers JPMorgan warned on Tuesday that there could be as many as 40,000 job losses in the City office market as a result of the credit squeeze, with 28,000 of these in the financial sector alone.
Despite the tight labour market, increases in average earnings remain modestly below the level that the Bank of England might consider a serious threat to its inflation target.
Average earnings excluding bonuses – despite a bigger than expected rise in February – increased by 3.8 per cent over the latest three-monthly period, just 0.1 percentage points higher than in the previous three months.
Average earnings including bonuses actually fell by 0.2 percentage points to 3.7 per cent over the same period.