Unemployment is up. Oh, and it's also down
There is an awful lot of confusion today about whether today’s jobs figures show that unemployment has risen or fallen. So here’s the simple answer.
Unemployment today is higher than the last time the Office for National Statistics reported it in January. That goes for both the unemployment rate and for the total number of people out of work.
In January the ONS reported that the number of people out of work was 2.32 million (in the three months from September to November). It reported that the unemployment rate was 7.1%.
Today, it reported that the number of people out of work was 2.34 million (in the three months from October to December). It reported that the unemployment rate was 7.2%.
Of course, that constitutes a rise on both counts. The confusion creeps in when one takes a glance at the official press release issued by the ONS. In this, the ONS chooses to compare the latest unemployment rate (for Oct-Dec) not with what they reported last month but with what happened in the previous three months (namely July to September).
On this basis, unemployment is most certainly down, after all back in the late summer of last year the unemployment rate was 7.6% and the number was closer to 2.5m.
The verdict is quite simple: unemployment is sharply down on where it was late last summer. However, when one’s strictly comparing what the ONS reported last month with what they are reporting this month, it is up a touch.
If you’ve understood that, and don’t want any further complications, then you should probably stop reading now. Because I’m afraid the story gets even more complicated.
As you’ll have noticed above, the unemployment number and rate are reported over three-monthly periods. The confusion above creeps in when one compares different three-monthly averages to another.
However, it so happens the ONS also publishes the figures for those single months as well as the three month averages. On this basis, it turns out unemployment is actually falling. To be more precise, the unemployment rate on a single-month basis last month wasn’t 7.1%, it was 7.4%. Today it’s 7.2% (yes, in line with today’s three monthly average, but that’s a coincidence).
So the reality is that unemployment is either falling or rising or falling, depending on which numbers you’d most like to focus on. The real lesson is that these numbers are volatile (and that’s before we get into questions over the methodology). On a broad basis, the labour market is most certainly improving. However, the rate of that improvement may be slowing a touch.