ONS revises UK unemployment rate down to 3.9%
By Benjamin Chiou
Date: Monday 05 Feb 2024
(Sharecast News) - The Office for National Statistics has downwardly revised the UK unemployment rate for late last year after readjusting its estimates on the back of new population data.
Monday's Labour Force Survey (LFS) showed that employment increased by 108,000 in the three months to November 2023, ahead of the 73,000 increase first predicted.
As such, the jobless rate was actually 3.9% for the three-month period, compared with the 4.2% rate previously estimated - something which economists believe will prompt the Bank of England to hold off longer before starting to cut interest rates.
"It seems very likely, therefore, that the official unemployment rate estimate for Q4, published on February 13, will undershoot the MPC's 4.3% estimate in last week's Monetary Policy Report, as well as the Committee's estimate of its equilibrium rate, 4.5%," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
The ONS explained that revisions to population estimates were a result of LFS reweighting changes since the Covid-19 pandemic.
"In recent years, the weighting approach for the LFS has had to incorporate tactical methodological changes, reflecting the challenges in conducting household surveys and measuring population change through a pandemic. In particular, the enforced change from face-to-face interviewing to telephone interviewing led to an increase in non-response bias in survey responses," the ONS explained.
Since 2020 the ONS has made changes to the LFS weighting but admitted that these were not intended as long-term solutions.
"The longer these changes to the LFS weighting were left in place, the more likely that this would lead to some bias, as underlying demographic changes were not being fully reflected in estimates of the rates of employment, unemployment and economic inactivity in the UK labour market."
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