North East long-term employment rises but some concerns in latest figures

The North East LEP has welcomed the longer term positive changes to the region’s employment rates but cautioned that shorter term fluctuations highlight the need for ongoing monitoring of the regional economy.

The latest ONS figures, published today, show that North East employment rate for the period May to July 2015 have fallen from 68.8 per cent to 68.1 per cent in the past year. This is against a backdrop of a growing working age population (16 – 64 years), which has increased by 9,000 to around 1.7m people. However, looking at longer term changes, the employment rate in the North East has increased from 67.3 per cent since May-July 2013.

The North East has also experienced a decline in the unemployment rate over this period. The current unemployment rate for the North East region stands at 8.6 per cent, notably lower than the 9.9 per cent of last year. The North East has seen this longer term improvement in labour market outcomes despite a rise in unemployment in the last quarter from 7.6 per cent. The region’s current unemployment rate was the highest in UK, which has an average rate of 5.6 per cent.

The inactivity rate in the region has risen over the past year from 23.7 per cent to 25.5 per cent, and remains a key concern for our economy. The average inactivity rate for the UK is 22.1 per cent. The North East inactivity rate has remained comparatively high since the end of the recession, although more of those classed as inactive declared they want to work over the last year.

In addition, the number of self-employed people in the region rose from 10.3 per cent to 11.3 per cent between 2013/14 to 2014/15, with 7,000 more women now self-employed. Over the same period, the number of over-65s in the workforce jumped from 5.2 per cent to 6.3 per cent.

The ONS figures for the region showed that a further 8,000 manufacturing jobs were created in the last year, while the proportion workforce jobs provided by the service sector rose from 81.7 per cent to 82.6 per cent, fuelled by the accommodation and food services, retail trade of repair of motor vehicles, health and social work and art and entertainment sectors. There was a decline of 6,000 construction jobs.

Chief Economist of the North East LEP, Chris Milne said: “Whilst today’s figures present a disappointing picture in the short term, they also demonstrate clear progress in the North East labour market over the past couple of years, helping to move us towards the targets we have previously set out in our strategic economic plan.

“The latest inactivity and unemployment rates highlight the need for more and better jobs in the region through addressing both supply and demand side issues in the regional economy and we have seen recent growth on the demand side. Between 2013 and 2014 3,000 new enterprises were created in the North East, a 5% increase.

“We are continuing to scrutinise labour market statistics which form an important part of our evidence base. To this end we have recently increased our team’s analytical capacity and I would like to welcome Fiona Thom to the team who has joined us from the Department for Health.”