Michael Simmons

Is the Bank of England about to cut interest rates? Today’s labour market statistics might just give them the room to do so. The latest data, released by the Office for National Statistics (ONS) this morning, shows that the number of payrolled employees is up, the unemployment rate is up, vacancies are down and pay growth is slowing. But is it enough? Job vacancies fell for the 20th consecutive time between December and February – and by twice as in last month's release. Vacancies were down to 908,000 on the quarter, a decrease of 43,000 – though they remain far higher than pre-lockdown levels. More data released yesterday by the Reed recruitment agency supports this too: job adverts are at their lowest level in more than three years.

Whilst Jeremy Hunt’s cut to National Insurance may grab the headlines, the real story of today’s Budget was hidden in the official forecasts accompanying it. These forecasts point to a disaster for Britain's labour force. The UK already had one of the worst post-lockdown workforce recoveries in the world, with a record 2.8 million people off work due to long-term sickness. But today the OBR said things are only going to get worse. Spending on welfare now makes up the second biggest portion of your tax bill –  narrowly pipped to the post by our NHS The OBR gave the Chancellor credit for expanding childcare provision, attempting to reform welfare and reducing personal tax rates – which it says will boost the labour supply by 300,000 people.

Britain’s worklessness crisis is getting worse. This morning the ONS released figures showing that 1.3 million are on unemployment. But that figure masks a welfare crisis that politicians are doing little to address. Unemployment only covers those actually looking for a job – the real problem is how few are. The true benefits figure goes unpublished and is buried in a password protected DWP database. Every three months the database is updated and we track the results on The Spectator data hub. It was updated this morning and shows the number claiming out-of-work benefits has hit some 5.6 million people. The increase is being driven by those in the Universal Credit (workless) category who are not required to find work. Many will be classified as too sick to work.

The jobs market has turned a corner. Vacancies have fallen again to 934,000, down 49,000 in the last three months of the year, the longest continuous fall on record. Wage growth slowed to 6.5 per cent in cash terms – which will please the Bank of England – but luckily for workers inflation is falling faster, meaning those rises translate into real terms pay bumps (of about 1.3 per cent). Employment climbed slightly while unemployment remained flat.  The next inflation figures are out tomorrow but the wage data are a sure sign of the direction of travel. Take out bonuses and average pay rose 6.6 per cent (1.4 in real terms). Hotels and restaurants saw the largest growth in pay excluding bonuses at 7.2 per cent.

The jobs market appears to be slowing down, but can we trust the figures? Vacancies have fallen for the longest continuous period on record, according to data published by the Office for National Statistics (ONS). But there are still just under 950,000 jobs on offer which is well above the pre-lockdown norm. Meanwhile, despite British workers receiving real-terms pay rises in the three months to October, wage growth seems to have peaked. This will please Bank of England rate setters who feared that spiralling wage demands could worsen inflation. Average weekly earnings (including bonuses) fell slightly to 7.2 per cent on the year, down from 8 per cent. Because of lower inflation (now at 4.6 per cent) that translated to real-terms pay increases of 1.3 per cent.