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GDP and the Labour Market, Q3 2011

Released: 16 November 2011 Download PDF

Employment and GDP growth

Q3 2011

Employment and GDP growth

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GDP grew by 0.5 per cent in 2011 Q3

GDP is estimated to have increased by 0.5 per cent between the second and third quarters of 2011. GDP has increased by 0.5 per cent since Q3 2010, a significant slowdown from the 2.6 per cent growth in the preceding twelve months.

Growth in the third quarter was led by the services sector which accounts for just over 76 per cent of total GDP. Services contributed the whole of the 0.5 per cent increase in GDP in the quarter, with a small positive contribution from the production industries being offset by a contraction in construction output.

Over the past year, GDP growth has been wholly dependent on growth in the services sector, which in total contributed 0.9 points to GDP growth over the year. Construction reduced GDP growth over the year by 0.3 percentage points, and production industries by another 0.1 percentage points. Within the latter, manufacturing was a positive contributor to growth but mining and quarrying reduced GDP growth by 0.4 percentage points.

Youth unemployment compared to overall unemployment

Q3 2011

Youth unemployment

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Labour market continued to weaken in Q3

The labour market continued to weaken in Q3, with employment falling, unemployment rising, and earnings growth continuing at a relatively subdued rate.

Although the labour market tended to lag developments in GDP growth during the recession and recovery, the labour market is weakening again alongside the weakness in GDP growth. This weak output growth is being reflected in employers' caution in increasing labour and the downward pressure on wage growth.

In Q3, employment dropped by 197,000 with the employment rate dropping 0.4 per cent to 70.2 per cent. Much of the fall in employment was attributed to men, as was the case during the recession.

The fall in employment between the second and third quarters was driven by a fall in employees of 305,000 while self employment rose by 100,000. The drop in employees is split fairly evenly between part-time and full-time workers. The rise in self employment is split around two-thirds full-time (63,000) and one third part-time (37,000).

Unemployment increased by 129,000 on the previous quarter and by 172,000 on the same period a year ago. Unemployment for the 16-24 year category is now above one million. Although the unemployment rate for the 18-24 year old category is much higher than the overall unemployment rate, at 19.6 per cent compared to 8.3 per cent, unemployment has increased at a similar pace for both age categories.

Total weekly hours increased in Q3 to reach 913.7 million hours but are still lower than total weekly hours in Q1. Average weekly hours are also lower in Q3 at 31.5 compared to 31.6 in Q1.

The claimant count rose by 66,200 between June and September. In more recent months the rises in the claimant count have been smaller. Vacancies increased by 3,000 in Q3 with the number of unemployed per vacancy rising by 0.2 to 5.7.

Source: Office for National Statistics

Background notes

  1. Sources:

    Gross Domestic Product (ABMI): chained volume measures, seasonally adjusted, Office for National Statistics.

    Total employment level (MGRZ), total unemployment level (MGSC): Labour Force Survey, all those aged 16 and over, seasonally adjusted, Office for National Statistics. Unemployment level 18-24 (YBVN), Labour Force Survey, seasonally adjusted, Office for National Statistics.

  2. Notes:

    Most recent Labour Market estimates are available from the Labour Market Statistical Bulletin published on 16 November 2011.

    GDP estimate for quarter three from Gross Domestic Product: Preliminary Estimate - Q3 2011 published on 1 November 2011.

  3. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

Content from the Office for National Statistics.
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