Up by 49,000 in the three months to December, employment increased by 1.9% year-on-year. The unemployment rate slightly increased (to 7.8% from 7.7%), but it remains low. Moreover the UK claimant count fell for the third month in a row in January (by 12,500). Activity should remain weak in 2013 but labour market strength should continue.

• The pace of increase in employment has slightly slowed in the three months to December compared to the three months to November. However it is still up by 49,000 leading to a 1.9% increase in year-on-year terms.
• This rise is encouraging. Average weekly hours worked slightlydecreased (-0.3%) but the number of full-time jobs rose by 80,000. By contrast, the number of people working part-time fell by 30,000 in the three months to December.
• Unemployment slightly increased in the three months to December compared to the prior three months (by 11,000), pushing up the unemployment rate (to 7.8% from 7.7%). However this increase is consistent with the further decrease in the inactivity rate (to 22.3%), its lowest level since the beginning of 1990. The fall in the level of the UK claimant count also showed a slight improvement on the labour market. Indeed down for the third month in a row in January (by 12,500), it reached its lowest level since June 2011.
• Meanwhile households’ purchasing power is dampened by the slower increase in headline earnings growth (+1.4% y/y in December after +1.5% y/y) whereas inflation remained unchanged in January (at 2.7%) and should remain high.
• The good employment numbers contrast with the economic downturn. Indeed GDP fell by 0.3% q/q in Q4 2012 and was flat in 2012. It can be explained by growing activity in services sector. Moreover firms may keep their workforce in anticipation of an improvement in activity in the coming months. Despite only limited growth in 2013, the labour market should remain robust.

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