The known unknowns underneath positive employment figures

June’s labour market statistics brought good news for the North East, but as our Head of Communications Rebecca Johnson explores, there are still things to be watching out for, even under all the positives.

As we’re North East-based, we keep a close eye on the economic outlook for the region.

Over the last few months, there’s been a succession of really positive sets of labour market figures - the employment rate has been going up, economic inactivity has been going down, and in the latest set of figures the North East’s unemployment rate is below the English average for the first time since they started counting the rate this way back in 1992.

This is all fantastic news, especially how much progress has been made in the last year - employment up 3.1 percentage points, and economic inactivity down 2.2 percentage points.

On economic inactivity in particular, the North East is no longer an outlier and the rate of 22.7% is just 0.1pp above Yorkshire and Humber and 0.2pp above the North West.

So, overall, the region’s labour market seems to be in a better place than it’s been in a long time - and while that’s something to celebrate, there are still lots of unknowns.

One of the quirks of big, regular datasets like the ONS labour market statistics is that the headline figures tend to hide some of the variation underneath them.

An example of that is that under the North East unemployment rate of 3.6% is disparity between the rate for men and the rate for women. In fact, the unemployment rate for men in the North East is more than twice that of women - 4.9% compared to 2.3%.

And underneath there’s an unknown.

There’s often a significant lag when it comes to detailed regional figures, and while we get monthly updates to employment figures, we don’t get monthly breakdowns on things like part time versus full time work, or on reasons for economic inactivity.

That’s a concern, because while North East unemployment is at a record low, there’s a risk that underemployment is going up - perhaps the cost of living crisis is encouraging people into ill-fitting part time work, when they would rather be working full time. That’s less than ideal for those individuals, and it’s a problem when it comes to productivity and growth fo the region overall.

Equally, nationally we know that the fall in economic inactivity is driven by a fall in those inactive for ‘other reasons’ (vague, I know) and those who had been looking after family and the home. We don’t know what’s driven the big falls in economic inactivity in the North East.

Despite that overall fall in inactivity across the UK as a whole, long term sickness remains at record highs nationally - whether that’s the case in the North East as well is another of those unknowns. You’d assume yes, but assume is all we can do until the next set of quarterly breakdowns, which are due in July.

These known unknowns contribute to a sense of a region which might be operating at two speeds.

On the one hand, there is definitely huge momentum in the business community.

The North East England Chamber of Commerce’s latest Economic Survey saw an easing of concern across all indicators, as the threat of recession appeared to recede in the first quarter of 2023.

That evidence is backed up by the conversations we have with clients and contacts - there’s a sense that factors like expanding devolution, incoming Saudi investment, and a revolution in offshore wind are opening doors for the region.

But on the other hand, there’s a need to make sure the positives are felt by everyone - most notably, child poverty continues to rise, as the latest figures from the End Child Poverty coalition make painfully obvious.

So, let’s celebrate the region’s successes, but keep that laser focus on building economic growth in an inclusive way.

Featured image by Marvin Meyer on Unsplash