Inflation Report
August 2006
Output and supply
Chart 3.1 Contributions to quarterly growth of service sector output(a)
(a) The components do not sum precisely to the total because of rounding errors.
Chart 3.2 Decomposition of the cumulative change in the participation
rate since 1998(a)
(a) Three-month moving average measure.
(b) This category includes individuals at or above the state retirement age. This is currently 65 for men and 60 for women.
Chart 3.3 Employment
(a) Includes those on government-supported training and employment programmes as well as unpaid family workers.
Chart 3.4 Private sector output per worker(a)
(a) ONS private sector output divided by private sector employment. The employment data have been calculated by subtracting ONS public sector employment from total LFS employment. The estimate
for 2006 Q2 is constructed using information in the preliminary GDP release and the assumption that private sector employment in 2006 Q2 grew at the same rate as total employment in the three months
to May.
Chart 3.5 Private sector capital services(a)
(a) See Oulton, N and Srinivasan, S (2003), ‘Capital stocks, capital services, and depreciation: an integrated framework’, Bank of England Working Paper no. 192, for a discussion of how these data are
constructed.
Chart 3.6 Survey estimates of private sector capacity utilisation
Sources: Bank of England and BCC.
(a) The underlying survey data measure the net percentage balance of firms who are working at full capacity.
(b) The manufacturing and services components have been aggregated using their share in output as weights. The series have been subtracted by their respective means and divided by their
standard deviations to normalise for volatility.
(c) The scores currently refer to likely capacity constraints faced by companies over the next six months. Before January 2005, these scores were based on companies’ current situation. See
Ellis, C and Pike, T (2005), ‘Introducing the Agents’ scores’, Bank of England Quarterly Bulletin, Winter, pages 424–30 for more details.
Chart 3.7 Unemployment rate
(a) Three-month moving average measure. This measure includes all those actively looking for work and available to start, and those due to start a new job in the next two weeks.
Chart 3.8 Employment and output in the distribution sector(a)
(a) Also includes hotels and catering.
(b) Based on Workforce jobs data which have been adjusted to be on a calendar quarter basis.
Tables
Table 3.A Decomposition of the annual change in the UK adult
population(a)
Averages
1990–94 1995–99 2000–04 2005
2006
Population
Workforce
Employed
Unemployed
Inactive
67
-123
-252
129
190
158
122
320
-198
36
292
205
271
-67
88
403
266
267
-1
137
385
446
223
223
-61
Memo:
Participation rate(b)
Employment rate(c)
63.4
57.7
62.5
58.0
63.0
59.8
63.1
60.1
63.5
60.1
Source: ONS Labour Force Survey.
(a) Thousands. The data indicate the changes in population, workforce and inactive in the
year to the Spring quarter (March to May).
(b) The workforce as a percentage of the adult population (Spring quarter observations).
(c) Employment as a percentage of the adult population (Spring quarter observations).
Table 3.B Survey evidence on recruitment difficulties and labour
shortages
2005
Averages(a) Q2
2006
Q3
Q4
Q1
Q2
July
Availability of agency staff(b)
KPMG/REC: Permanent
KPMG/REC: Temporary49.1
48.2
49.1
46.0
50.6
48.0
48.8
45.1
51.5
45.6
48.7
45.1
49.3
41.2
Recruitment difficulties(c)
BCC: Manufacturing(d)
BCC: Services
64
62
44
63
44
58
46
61
39
62
43
60
n.a.
n.a.
Factors likely to limit output(e)
CBI: Skilled labour
CBI: Other labour
12
3
11
3
16
4
10
2
15
2
11
2
n.a.
n.a.
Sources: BCC, CBI and KPMG/REC.
(a)
(b)
(c)
(d)
(e)
Averages are from 1996 apart from the KPMG/REC survey, which is from October 1997.
Indices for which 50 represents no change. A balance above 50 indicates rising labour availability.
Percentages of firms reporting difficulties.
Includes agriculture and construction.
Manufacturing sector. Weighted percentages of respondents.