UK delays publication of workforce data, raising concerns about accuracy

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The UK’s official statistics agency has been forced to delay the release of some key labour market data, raising concerns over the accuracy of figures that are closely watched to inform Bank of England interest rate decisions.

The Office for National Statistics was due to publish monthly figures for employment, unemployment and inactivity on Tuesday but has now said data based on its labour force survey (LFS) will not be released until next week.

On Tuesday, the ONS will publish only figures on wages and vacancies, based on different surveys, along with experimental figures drawn from HM Revenue & Customs records.

The decision to pull parts of a major data release at short notice suggests existing problems with the survey have become acute and casts doubt over the ONS’s headline findings on the state of the workforce.

Darren Morgan, ONS director of economic statistics production and analysis, told the Financial Times the delay was “because we want to be confident in the numbers we put out” and did not reflect on previous releases.

However, he acknowledged that the LFS had recently diverged from other data sets — showing a sharp rise in unemployment over the summer while other sources painted a stronger picture of employment.    

The ONS said on Friday it needed more time “to produce the best possible estimates” of indicators based on its LFS.

The agency has previously warned that its labour market estimates for subgroups of the population had become more uncertain since the outset of the coronavirus pandemic.

This was because the response rate to the LFS dropped sharply when researchers were unable to knock on doors due to Covid restrictions, and had fallen further since.

The response rate currently stands at 14.6 per cent, down from about 40 per cent in 2019.

“It’s got Long Covid, or the equivalent,” said Jonathan Portes on Monday, a professor at King’s College, London, who has been advising the ONS on an overhaul of the LFS for next spring.

The uncertainty over the data has implications for policy, as the BoE seeks to gauge how hard rising interest rates are hitting economic activity and how persistent high inflation could prove.

Recent ONS data has pointed to a long-term decline in workforce size, which could fuel wage growth in the absence of productivity gains to match — a cause of concern for the central bank.

The agency has recorded a 411,000 rise since 2019 in the number of people who are economically inactive — meaning they are neither in a job nor looking for one — largely due to higher levels of long-term sickness.

Given the doubts around the survey’s accuracy, however, “I don’t think we know that”, Portes said.

Huw Pill, BoE chief economist, also cast doubt on Monday on the ONS’s main measure of wage growth, saying in an online seminar that it looked to be “increasingly an outlier” in showing average pay up by more than 8 per cent over the past year, while other measures suggested pressures were easing.

Morgan said the ONS had no concerns over the survey of employers that underpinned its wage data and that the rollout of its revamped labour force survey was going well, with a response rate close to 40 per cent.

The ONS has sent this new survey to much larger numbers of households, offering a £10 voucher and ONS merchandise, ranging from notebooks to tote bags, in order to induce more people to respond.