Sumner: Britain Has Job Growth Miracle

     He makes the point that Britain has created quite a few jobs considering that they've been in recession; based on the recent 4th quarter British numbers-which are subject to revision-their numbers would be good even if they weren't in a recession. So what gives?

     The endlessly perplexing British economy continues to post bizarre jobs numbers:

The employment numbers continue to be surprisingly strong, with a rise of 154,000 to 29.73 million in the October-December 2012 period, and a huge 584,000 increase over 12 months. Interestingly, the rise in employment was more than accounted for by an increase in full-time employment of 197,000 in the latest three months, with part-time employment down 43,000.

To put that in perspective for American readers, that would be the equivalent of 2.9 million jobs over 12 months in the US, far more than we’ve actually be able to generate.  (America has roughly 5 times the population of the UK.)

How did this jobs miracle happen?  Well let’s start with the fact that it may not have happened, the data might be wrong.  After all, RGDP has been flat, and Britain has been in recession during much of this time.

If it did happen, this might be one reason why:

Pay continues to be weak, up just 1.4% over the past year. More here.

If this refers to hourly nominal wages, it might help explain the jobs gains.  If it’s not hourly data, it’s meaningless.

 
     http://www.themoneyillusion.com/?p=19583

    Aha! The British workers are willing to take a pay cut?! Unlike selfish Americans? Of course, he waits till the end to dump on Keynesians. Save the best for last:

      Keynesian models are completely silent on the question of how much real output we can expect from a given rise in employment.  That’s the supply-side of the economy, which the Keynesian multiplier model does not even attempt to explain.

Keep this in mind when you read prominent Keynesians telling us about the impact of the so-called “austerity” program adopted by the Cameron government.  They aren’t even addressing the real puzzle–why so many jobs?

     It is an interesting data point. What can explain it? Does it in anyway show the Keynesians are wrong about austerity? Do they have to explain why there are so many jobs before they get to talk about austerity again?

    One point Sumner leaves out however, is despite the impressive increase in jobs during Q4, unemployment itself dropped by only 14,000.