The truth will out

Understanding labour market statistics during the coronavirus crisis

Labour market statistics matter. In normal times, they offer a snapshot on how household living standards are faring, and in recessions they also provide a key measure of how serious a crisis we face. Because the current coronavirus crisis is rooted in the labour market, even more attention is being paid to the monthly labour market data published by the Office for National Statistics (ONS) than usual, and measures of unemployment in particular. But the most recent releases have presented what seems at first glance to be a confusing picture. For example, in the June 2020 release, the official estimate of the unemployment rate for April hardly budged from that in the previous month. By contrast, the Claimant Count measure of unemployment, based on receipt of various out-of-work benefits, increased by a record monthly change of one million in April to reach 2.3 million (and then further in May to reach 2.8 million). Media coverage and politicians have focused on this huge Claimant Count increase, despite its apparent inconsistencies with other available data.

This note explores the inconsistencies between the different elements of the ONS’ labour market release. It then sets out a number of their drivers, and provides recommendations to both the ONS and to users of these high-profile statistical releases.