More bad news in the latest numbers

Hours worked are down, the claimant count is up, fewer jobs are going and labour output is down.

Three more important data releases today put further nails in Osborne's economic coffin. The big news of the day was the ONS release of data on the labour market, which showed that all of the good news we had seen over earlier months this year has now gone into reverse.

First, the number of unemployed on the ILO count increased by 38,000 over the quarter to reach 2.49 million and the unemployment rate rose to 7.9 per cent.

Second, the claimant count in July 2011 was 1.56 million, up 37,100 on the previous month and up 98,600 on a year earlier.

Third, the unemployment rate for 16-to-24-year-olds was 20.2 per cent in the three months to June 2011, up 0.2 percentage points from the three months to March 2011.

There were 949,000 unemployed 16-to-24-year-olds in the three months to June 2011, up 15,000 from the three months to March 2011.

Fourth, though total employment is up on the year by 250,000, the total number of hours worked, which is a better measure of the labour input, was 910.6 million in the three months to June 2011, down 11.3 million from the three months to March 2011 and down by seven million from April-June 2010 when this government took office.

Fifth, in the three months to June 2011, 154,000 people had been made redundant, up 32,000 from the three months to March 2011 and up 4,000 from a year earlier.

Sixth, the number of job vacancies in the three months to July 2011 was down 22,000 on the three months to April 2011 and down 28,000 on a year earlier.

Seventh, regular pay growth remained benign at 2.2 per cent.

Chris Williamson, chief economist at Markit, commented:

Survey data indicates that unemployment is likely to continue to rise in coming months, as private-sector employers fail to make up for public-sector job cuts. The Markit/CIPS PMI survey showed companies reducing their headcounts in July due to concerns over the economic outlook and recruitment firms reported that the number of people they had placed in permanent jobs had risen at a rate only marginally higher than June's near two-year low. This tallies with official data showing that the number of job vacancies fell to the lowest in almost two years. Business confidence clearly needs to rise before employment growth will pick up again but, at the moment, the surveys suggest that companies remain worried about economic growth both at home and abroad and are generally erring towards cost-cutting rather than expansion.

None of this is good news.

Then there was the release of the Bank of England's agents' report on the economy, which suggested little evidence of growth in the economy. They reported evidence of weak growth in spending on consumer goods and services. The agents' score for growth in goods exports had fallen back somewhat from recent highs and a slowing in the pace of growth of manufacturing output, reflecting softening domestic demand.

Finally, the minutes of the August MPC meeting showed a vote of 9-0 for no change, which meant that the two inflation nutters Spencer Dale and Martin Weale had seen the error of their ways and reversed their wrongheaded votes for rate rises. Once again, my friend Adam Posen voted for more QE.

This paragraph is especially telling, suggesting the risks to the downside have increased:

The key risk to the downside remained that demand growth would not be sufficiently strong to absorb the pool of spare capacity in the economy, causing inflation to fall materially below target in the medium term. News over the month had generally reinforced the weak tone of indicators of global activity growth over the past few months, which had been particularly notable in data releases for the advanced economies. While some of the slowing would have reflected the impact of continuing disruption to global supply chains and the effects of the elevated price of oil, the committee judged it increasingly likely that the global slowdown would prove to be more prolonged than previously assumed.

Far from being vindicated, the data is giving Osborne and his failed economic strategy a deserved comeuppance. There has been zero positive news on the economic data front for some time now.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

Photo: Getty
Show Hide image

Who will win in Stoke-on-Trent?

Labour are the favourites, but they could fall victim to a shock in the Midlands constituency.  

The resignation of Tristram Hunt as MP for Stoke-on-Central has triggered a by-election in the safe Labour seat of Stoke on Trent Central. That had Westminster speculating about the possibility of a victory for Ukip, which only intensified once Paul Nuttall, the party’s leader, was installed as the candidate.

If Nuttall’s message that the Labour Party has lost touch with its small-town and post-industrial heartlands is going to pay dividends at the ballot box, there can hardly be a better set of circumstances than this: the sitting MP has quit to take up a well-paid job in London, and although  the overwhelming majority of Labour MPs voted to block Brexit, the well-advertised divisions in that party over the vote should help Ukip.

But Labour started with a solid lead – it is always more useful to talk about percentages, not raw vote totals – of 16 points in 2015, with the two parties of the right effectively tied in second and third place. Just 33 votes separated Ukip in second from the third-placed Conservatives.

There was a possible – but narrow – path to victory for Ukip that involved swallowing up the Conservative vote, while Labour shed votes in three directions: to the Liberal Democrats, to Ukip, and to abstention.

But as I wrote at the start of the contest, Ukip were, in my view, overwritten in their chances of winning the seat. We talk a lot about Labour’s problem appealing to “aspirational” voters in Westminster, but less covered, and equally important, is Ukip’s aspiration problem.

For some people, a vote for Ukip is effectively a declaration that you live in a dump. You can have an interesting debate about whether it was particularly sympathetic of Ken Clarke to brand that party’s voters as “elderly male people who have had disappointing lives”, but that view is not just confined to pro-European Conservatives. A great number of people, in Stoke and elsewhere, who are sympathetic to Ukip’s positions on immigration, international development and the European Union also think that voting Ukip is for losers.

That always made making inroads into the Conservative vote harder than it looks. At the risk of looking very, very foolish in six days time, I found it difficult to imagine why Tory voters in Hanley would take the risk of voting Ukip. As I wrote when Nuttall announced his candidacy, the Conservatives were, in my view, a bigger threat to Labour than Ukip.

Under Theresa May, almost every move the party has made has been designed around making inroads into the Ukip vote and that part of the Labour vote that is sympathetic to Ukip. If the polls are to be believed, she’s succeeding nationally, though even on current polling, the Conservatives wouldn’t have enough to take Stoke on Trent Central.

Now Theresa May has made a visit to the constituency. Well, seeing as the government has a comfortable majority in the House of Commons, it’s not as if the Prime Minister needs to find time to visit the seat, particularly when there is another, easier battle down the road in the shape of the West Midlands mayoral election.

But one thing is certain: the Conservatives wouldn’t be sending May down if they thought that they were going to do worse than they did in 2015.

Parties can be wrong of course. The Conservatives knew that they had found a vulnerable spot in the last election as far as a Labour deal with the SNP was concerned. They thought that vulnerable spot was worth 15 to 20 seats. They gained 27 from the Liberal Democrats and a further eight from Labour.  Labour knew they would underperform public expectations and thought they’d end up with around 260 to 280 seats. They ended up with 232.

Nevertheless, Theresa May wouldn’t be coming down to Stoke if CCHQ thought that four days later, her party was going to finish fourth. And if the Conservatives don’t collapse, anyone betting on Ukip is liable to lose their shirt. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.