Bad jobs news

Today's jobs news was bad. The latest labour market stats from the ONS show that the recession is now hitting hard.

The increase in unemployment is the main headline - with the unemployment rate rising to 6.0%, and the unemployment level hitting 1.86m, in the 3 months to October. And the JSA claimant count has now passed 1 million, for the first time since 2001.

Behind the headlines, the ONS reveal some other worrying trends:

• Number of workforce jobs fell 134k in the 3 months to September, to 31.53m - that's the sharpest fall in jobs since Dec 1992
• Employment rate fell to 74.2%, in the 3 months to October - down from 74.6% in May-July - that takes us further away from the Government's goal of 80% employment
• Economic inactivity rate notched up to 20.9%, in the 3 months to October - that highlights how difficult it will be to reduce worklessness in the next year or two
• Number of job vacancies fell to 562k, in the 3 months to November - down 118k over the year - that basically means labour demand is falling, and more job cuts are on the way

Employment Minister Tony McNulty admitted that today's figures were "very disappointing" - and announced a bit of extra help for those who have just lost their job. But with unemployment set to head towards 3m next year, it's difficult to see anything positive in today's figures.

At the regional level, the unemployment rate is highest in the North East (8.2%) and London (7.6%) - which shows that there is no simple North-South divide. Three bits of evidence underline this...

Today's Annual Business Inquiry figures for 2007 show that, before the recession started, employment growth was stronger up North than down South. Wakefield and Derby saw very strong jobs growth of almost 8% (2006-07), while Cambridge and Oxford fell by about 4%. This was most likely because the South had already passed its job creation peak by then, and the North was behind the curve and still adding jobs at the fag end of the boom.

But the picture has changed a lot since 2007. Over the last year, cities like Hull and Barnsley have seen the biggest increase in JSA claimants - up by 3k and 2k. David Ottewell (Manchester Evening News) has a great regional breakdown on his blog, showing that unemployment has increased most recently in Scotland (by 19%), Wales (17%) and the North East (15%). He rightly says that the North will likely suffer the brunt of the recession - contrary to reports that the South will be worst hit. But cities like Swindon and Gloucester have still had sizeable increases in JSA claimants of 1,400 and 700.

Our own analysis of the latest JobCentre Plus vacancies data shows that their job vacancies are falling across the country. Down 33% in Leeds during Sep-Nov, compared to the previous year - double the national drop of 16%. Down in Hull by nearly 50%, which is quite alarming. And down even in well-off cities like Cambridge, by 27%. By sector, manufacturing and construction have seen the biggest fall-off in demand (down 34% and 32%), but vacancies are also down 19% in financial services.

So the picture is quite complicated. The recession won't just hit the South. The North is not immune. And not every city is well-placed to weather the storm. The impact is likely to be sectoral, rather than regional.

One interesting aside. In September, 5.76m people were employed in the public sector - up 15k on the year. And 23.61m were employed in the private sector - down 128k on the previous quarter, but up 43k on the year. This is a useful reminder of the relative share of public-private sector jobs, and also puts the Gershon efficiency savings into context.