Today’s unemployment figures – good news?
Today’s unemployment figures suggest that rapid recent rises in unemployment may be behind us. Between June and July ILO unemployment levels actually fell by 1000, from 2,470,000 to 2,469,000, although on the quarter there was still a significant rise of 88,000. This quarterly rise is much less than the increases we saw earlier this year, but remains historically high. And there is also some very bad news, as long-term unemployment is now showing sharp increases – 599,000 unemployed people have been out of work for over 12 months, a quarterly increase of 72,000 and an increase of 32,000 between June and July – the largest since the recession started.
It was always unlikely that youth unemployment was going to rise above 1 million this time around – it would have required a monthly rise of 53,000 which is far greater than we’ve seen in recent months. But in fact, overall levels of youth unemployment (16-24 year olds) also fell by 1,000 on the month, from 947,000 to 946,000. Again this could be good news, but it’s far too early to call: there have been monthly falls before during this recession; on the quarter unemployment among 16-24 year olds still showed an increase of 19,000; when only 18-24 year olds are considered the numbers are still going up (12,000 on the month); and long-term youth unemployment is rising quickly. 40% of all unemployed young people have now been out of work for over 6 months, a total of 381,000 16-24 year olds. The last time the numbers were this high was May 1994.
It’s also interesting to look at the non-seasonally adjusted figures, which show that in fact far higher numbers of young and older workers are out of work than the figures published in the monthly release are showing us. Seasonal adjustment is a process by which seasonal effects are removed from time series data. Its advantage is that it allows you to look across a data series and understand the economic trends without being distracted by unemployment increases which are a result of particular events, such as many young people leaving school in the Summer, or shops taking on extra temporary staff over Christmas. However, the process does mean that the regular unemployment releases do not always tell us exactly how many people are unemployed at any one point in time.
The non-seasonally adjusted figures for the June – August period (today’s data) show that in fact there are 2,557,000 people who are ILO unemployed, 1,050,000 of whom are aged between 16-24. In a typical year, many of these people would be expected to find work in the next few months, but if fewer than expected do we may see larger increases in the seasonally adjusted figures over future months.
Today’s figures definitely provide a glimmer of good news. But with public sector workers increasingly anxious about their jobs, many predicting a slow recovery and long-term unemployment continuing to show sharp rises, there are plenty of challenges ahead.