UK strike disruption highest since 2011 in December, as real pay keeps falling – business live

Key events

ONS: Sharp rise in days lost to strikes

Here’s Darren Morgan, director of economic statistics at the Office for National Statistics (ONS), with the key points from today’s UK jobs report:

“The last quarter of 2022 saw fewer people remaining outside the labour market altogether, with some moving straight back into a job and others starting to seek work again.

“This meant that although employment rose again, unemployment edged up also.

“Although there is still a large gap between earnings growth in the public and private sectors, this narrowed slightly in the latest period.

“Overall pay, though, continues to be outstripped by rising prices.”

“Though still at historically very high levels, job vacancies have dropped again, with a particularly sharp fall from the smallest employers.

“The number of working days lost to strikes rose again sharply in December.

“Transport and communications remained the most heavily affected area, but this month there was also a large contribution from the health sector.”

UK vacancies fall

The number of vacancies across the UK has fallen, as companies hold back their hiring plans as the economy slows.

There were 1.134m vacancies in the November-January quarter, the Office for National Statistics reports. That’s a decrease of 76,000 from August to October 2022 – the seventh quarterly decline in a row.

Vacancies fell at 16 out of 18 industry sectors during the quarter, and were 135,000 lower than a year ago.

Photograph: ONS

Overall, the number of working days lost to strike action in the UK in 2022 was the highest since 1989, Sky News has calculated.

They say:

The number of working days lost to strike action totalled 843,000 in December, bringing the total number of strike days from June to December 2022 to 2,471,000, the highest since 1989, official figures show.

There were 4,129,000 days lost to strike action in 1989 due to industrial action by rail workers and coal miners, the Office for National Statistics said.

The loss in days due to labour disputes in December month is the highest since November 2011 due to public sector pension strikes. That month saw 997,000 working days lost to strikes.

More people returned to the labour market in the final quarter of last year, which may help the UK’s worker shortage.

Today’s labour market report shows that the UK’s economic inactivity rate dropped to 21.4%, 0.3 percentage points lower than the previous three-month period. That means that more people were either working or looking for work.

But it’s still 1.2 percentage points higher than before the pandemic.

Jack Kennedy, UK economist at jobs site Indeed, explains:

There was a record-high net flow out of economic inactivity in the latest quarter, driven by more students, retired and long-term sick moving into employment.

There remains a long way to go and overall inactivity remains high but, if sustained, these trends could help ease staffing gaps still faced by many employers despite the economic uncertainty.”

Introduction: 843,000 working days lost to strikes in December

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The wave of UK strike action at the end of last year was the most disruptive in over a decade, the latest employment data shows.

The Office for National Statistics has reported this morning that 843,000 working days were lost because of labour disputes in December 2022, the highest for any month since since November 2011.

Key services across the UK were hit by industrial action during December, as workers pushed for pay rises that kept up with UK inflation. Railway workers, Royal Mail staff, border force staff and nurses were among those taking strike action.

Today’s labour market report also shows that basic pay grew at the the fastest rate on record, outside of the Covid-19 pandemic period.

Regular pay (excluding bonuses) rose by 6.7% per year in the October-December quarter.

That may alarm the Bank of England, as it tries to bring UK inflation down from double-digit levels towards its 2% target.

The ONS says:

For regular pay, this is the strongest growth rate seen outside of the coronavirus (COVID-19) pandemic period.

Growth in average total pay (including bonuses) slowed a little, to 5.9%.

Public sector pay lagged behind private sector employees, though. Average regular pay growth for the private sector was 7.3% in October to December 2022, and 4.2% for the public sector.

But once you adjust for inflation, pay actually fell.

In real terms (adjusted for inflation), total pay shrank by 3.1% while regulay pay fell by 2.5%. This is one of the biggest falls on record.

The ONS says:

This is smaller than the record fall in real total pay we saw in February to April 2009 (4.5%), but remains among the largest falls in growth since comparable records began in 2001.

Today’s labour market also shows that the unemployment rate remained near at record low, at 3.7%.

Investors are poised for the latest US inflation report, due at 1.30pm UK time.

It’s expected to show that the cost of living squeeze eased, with the consumer prices index dropping to 6.2% per year from 6.5% in the year to December.

A sharp drop in inflation would clearly be welcomed by the markets, as it could encourage US central bankers to slow their interest rate increases.

Wael Makarem, senior market strategist at trading platform Exness, says

This could be a critical data point for the dollar and other assets in particular after the Federal Reserve slowed the pace of its interest rate increases and the surprise over the US job market’s figures.

Inflation in the US has been declining on a year on year basis pushing the US central bank to review its policy. However, a surprise tomorrow could alter expectations. Higher-than-expected inflation figures could reinforce the case for higher interest rates for a longer period of time, which could push the US dollar higher. In any case, higher volatility could be expected.

• 7am GMT: UK labour market report

• 10am GMT: Eurozone GDP report for Q4 2022 (second estimate)

• 1.30pm GMT: US inflation report for January