The labour market is finally showing signs of improvement, with the unemployment rate falling sharply from 9.8% last November to 8.9% this February. That decline, however, owes more to a large exodus of people from the labour force rather than stronger employment growth. The wider employment-to-population ratio, which abstracts from labour force swings, suggests that the slack in the labour market is still as big as it ever was. Nevertheless, employment growth is trending gradually higher and the survey evidence points to a more meaningful pick-up over the next few months.
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