Round-up of the week

Employment rate rises to record high

The employment rate in the UK has gone up to another historic high, the Official for National Statistics (ONS) has revealed.

According to the latest labour market data, the employment rate stood at 74.2 per cent by the end of the first quarter of 2016.

Figures also show that the number of people in work rose to 31.58 million during the three months to the end of March.

Meanwhile, the unemployment rate remains at its lowest level in a decade at 5.1 per cent, which is below recession levels.

The data has been hailed by the work and pensions secretary Stephen Crabb, who said: "These are another record-breaking set of figures.

"More people in work means that more families across the UK are benefiting from the security of a regular wage and the fulfilment that employment brings," he commented.

"But the job is not done, which is why our welfare reforms, such as Universal Credit, are making sure that it always pays to be in work."

Business community responds to employment figures

The ONS data has prompted a cautious response from leading business groups in the UK.

The CBI described the increase in employment as "encouraging", but stressed there are some signs of a softening in the labour market, as job vacancies are falling back.

Josh Hardie, deputy director-general of the body, commented: "Continued uncertainty could be weighing on hiring intentions. In addition, we are seeing evidence that employers are considering the impact of the National Living Wage, introduced last month.”

The British Chambers of Commerce (BCC) added that while employment is at a record high, data including manufacturing, trade and GDP figures point towards a softening in economic activity.

David Kern, chief economist at the group, commented: "The slowing pace of growth supports the findings of our own quarterly economic survey. However, the UK labour market remains flexible and dynamic, and is a source of strength for our economy."

He added that the modest growth in average earnings will support the case for sticking with low interest rates. Nevertheless, he said additional steps need to be taken to deal with issues such as skills shortages, as this would "help to unlock growth".

Queen's Speech reaction

The business community has also responded to this week's Queen's Speech, in which the government laid out its legislative agenda for the coming year.

Josh Hardie of the CBI said it is good to see the government has a "clear commitment to locking in growth, creating jobs and boosting investment to create a more prosperous society".

This, he stated, is encouraging given the focus on the upcoming European Union referendum in this political cycle.

Mr Hardie also hailed the pledge to improve the UK's digital infrastructure, saying that ensuring broadband reaches all corners of the country will "breed a new generation of companies in an increasingly competitive environment".

However, he stressed it is vital that the government continues to pursue its programme even if the UK electorate votes to leave the European Union next month.

Dr Adam Marshall of the BCC added that businesses will "see the merit in many of the bills announced in the Queen's Speech", particularly the commitment to boosting access to high-speed broadband across the UK.

"If implemented in full and at pace, this could go some way to improving the poor digital connectivity that far too many firms face," he commented.

Nevertheless, Dr Marshall said on issues where businesses are "impatient for action", such as skills gaps, taxes and aviation capacity, "big decisions" are needed more than new legislation.

To discuss conditions in the labour market and operating environment further, speak to one of our experts here at The Maine Group!