Round-up of the weekPosted on 16th September 2016
Employment rate at record high of 74.5 per cent
The number of people in work remained at a record high in July 2016, new figures have revealed.
According to the Office for National Statistics, the employment rate stayed at 74.5 per cent between May and July, with 31.77 million now in work.
Meanwhile, unemployment remained at a ten-year low of 4.9 per cent.
Damian Green, the work and pensions secretary, welcomed the data, saying: "It’s great to see another record-breaking set of figures out this month, with the unemployment rate at a ten-year low and wages growing healthily.
"We know that there are fewer children living in workless households too, which underlines our efforts to help people move into employment and to build a Britain that works for everyone, not just the privileged few."
However, Mr Green stressed much more still needs to be done and insisted the government will work with businesses to help "more people take up the wealth of opportunities out there in the economy".
The British Chambers of Commerce (BCC) responded to the figures by saying they "confirm that the UK jobs market remains in good shape".
However, the business group said people should avoid reading too much into a single month's statistics.
Suren Thiru, head of economics at the BCC, commented: "As predicted in our recent economic forecast, weaker employment alongside expected increases in inflation could trigger a broader economic slowdown by squeezing household spending - a major driver of UK economic growth.
“More must be done to provide businesses with the clarity and stability they need to grow and recruit, which must include a clear and immediate guarantee that EU workers can stay in British firms."
Mr Thiru added that most companies believe that providing residency guarantees for EU workers would have a positive impact on their business.
Bank of England holds interest rates
The Bank of England's Monetary Policy Committee has opted to leave interest rates on hold at 0.25 per cent.
According to the Institute of Directors, this was the "right decision", but it said the Bank is currently in a "difficult position".
Chief economist James Sproule commented: "Economic data so far is better than expected, yet there are still justifiable concerns about firms and consumers holding off on large investments.
"If economic conditions continue to hold up, the Monetary Policy Committee should refrain from further loosening monetary policy."
Mr Sproule acknowledged that the timing and precise nature of what Brexit will entail is a "natural and justifiable worry".
Nevertheless, he said "investors should not allow this to obscure concerns about the ability of the Bank to effectively intervene in a future crisis".
"Longer-term, interest rates will have to be brought back to a more normal level," Mr Sproule added.
Suren Thiru of the BCC, meanwhile, described the Bank of England's decision to freeze interest rates as "unsurprising".
"Although the post-referendum economic data has been decidedly mixed, we expect growth to slow sharply in 2017," he said.
"We anticipate the MPC will move again to cut interest rates before the end of the year."
However, he pointed out that since interest rates are already close to zero, further cuts will "do little to stimulate growth".
Furthermore, Mr Thiru suggested they could "exacerbate the cost pressures that both businesses and consumers may face in the coming months from a weakening currency".
"With the monetary policy tools at the MPC’s disposal largely exhausted, it is vital that the government uses the upcoming Autumn Statement to deliver a fiscal environment that supports confidence and incentivises businesses to invest," he stated.
To discuss conditions in the labour market and operating environment further, speak to one of our experts here at The Maine Group!