Are we nearly there yet? (redux)
As usual it doesn’t take long for the OBR employment forecast to look too low. Labour market data covering the three months to March out today:
Employment has hit the OBR’s estimate of trend employment. I’m not sure if this is a first, due to the ONS revision to population estimates last year, the current labour market data is not comparable with old OBR forecasts. Another upward revision to the OBR’s trend seems not unlikely.
Hours worked are slightly weaker than forecast. It’s going to be interesting to see what happens to average hours. The OBR thinks the rise in average hours since 2010 is a cyclical blip in a structural downward trend. We’ll see. If welfare reform is driving up average hours, and is one of the reasons that average productivity is not growing (due to a composition effect), let’s hope the OBR is wrong on this too.