Strong labour market good news for households concerned about rising costs

Commenting on this morning’s release of labour market statistics, that showed unemployment falling to 3.9% in the 3 months to February 2022, Kitty Ussher, Chief Economist at the Institute of Directors, said:

“Overall, a strong labour market is good news for households concerned about the rising cost of living. High vacancy rates mean there are plenty of opportunities to earn a living and an extra 275,000 people joined the payrolls in February.

“For those in work, pay rates just kept up with inflation in the three months to January but only when bonuses were taken into account, suggesting that pay is more likely to be keeping up with inflation in the private sector compared to the public sector.

“Of greater concern is the rise in economic inactivity, particularly among the over 50s, which shows no sign of abating. To the extent that this consists of people who have accumulated savings earlier in their career, they may have sufficient resources to weather the cost of living storm. Of greater concern are the newly inactive who previously worked in low pay sectors, so may be more vulnerable to rising costs but are not yet able to receive a pension.”