Brickonomics

Figuring out trends in housing, construction and property


Construction employment falls despite growth in self employment

Brian Green

For many economists and commentators the employment data released today by the Office for National Statistics were better than expected.

The figures hint at a few more people employed and a few fewer unemployed people across the economy, if we look at the seasonally adjusted data. But compared with a year ago the number of people employed is pretty much the same, given the potential for errors inevitable in such data.

In the light of the emphasis Government is putting on rebalancing the economy, the picture isn’t quite so rosy when we look at the sectors of the economy that are employing more people. Employment in both construction and manufacturing is down on a year ago.

Perhaps of more interest and concern is that fewer people are directly employed in the economy while the number of self-employed is rising.

Although the change is not that great this tempers the good news in the data. It suggests that firms are not that comfortable with hiring at the moment.

For house builders this isn’t good news either as the self-employed are far less likely to move home and so far less likely to buy.

The pattern of fewer direct employees and more self employees also seems to be very evident in construction.

Overall employment in construction is in decline. There were on this count about 59,000 fewer in employment in the industry in 2012 Q1 than a year earlier. The graph clearly shows the fall (blue line).

But the data out today (the employment measure taken from the Labour Force Survey) shows a rise of 4.1% in the number of self-employed in construction compared with a year ago, while the number of directly employed fell 6.6%.

So while the employment data overall may be received with a little cheer here and there, it is hardly a cause for celebration.

And with construction output taking a dive in the first quarter of this year there is increasing likelihood that more jobs will be lost to the industry.

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