Commenting on today’s ONS Labour Market Statistics, Mark Beatson, chief economist for the CIPD, the professional body for HR and people development, said:
“This set of statistics raises more questions than most about the direction of the economy. Employment growth in the three months September-November 2014 was 37,000, compared with 243,000 just six months previously, so there is some easing of jobs growth. This is consistent with the unfilled vacancies figures, which reached the 700,000 mark in the three months October-December. Vacancies are at their highest level since this series was first calculated, in 2001, but again the rate of growth is slower than last spring and summer.
“This suggests that a greater proportion of employers are facing difficulties filling vacancies compared with last year. In the face of a tightening labour market employers should look at how they can make better use of the skills and knowledge they already possess and whether they are maximising their potential to attract candidates. Investing in the future talent pipeline with clear progression paths is key to offsetting recruiting difficulties and will help to ease retention problems that are often ignored in the narrow debate about skills shortages.
“This easing of demand for labour may be a reflection of an economy that was growing less strongly in the second half of 2014, consistent with the latest Office for Budget Responsibility forecast. However, it could also be a sign that excess capacity in the labour market is starting to be used up. If we use the three month average, annual earnings growth has increased each month since June of last year but this does not mean pay is going to take off – it could just be a correction from the very low rates of pay growth we saw in these figures during the spring.
“The ONS provisional estimates for GDP for the fourth quarter of 2014, due to be released next Tuesday, might help us judge whether it is the economy or just the labour market that is slowing from a canter to a trot. We must also remember not to make too much of any single set of figures. With lower oil prices and renewed concerns about growth in the Eurozone adding to the mix, it might take a little while for the markets and policy makers to work out how much growth the UK will manage in 2015, and this probably delays the point when the Monetary Policy Committee increase interest rates”.