(Bloomberg) -- The UK statistics agency warned of a fresh delay to its switch to a new labor market survey, a setback that is likely to deepen concerns at the Bank of England over the accuracy of the jobs data.
The Office for National Statistics said on Tuesday that moving to its new Transformed Labour Force Survey in mid-2025 “is now unlikely given current quality concerns” and said it could take until 2027.
It said in a statement that it will provide an update on the timetable for the transition in the spring and is discussing with the government making filling out the key survey mandatory for households. The ONS added that it is currently testing a shorter survey and deploying more interviewers with the aim of boosting response rates and reducing bias.
The ONS temporarily suspended its Labour Force Survey last year after a plunge in response rates stoked concerns over the accuracy of its estimates for unemployment, employment and economic inactivity.
The problems have made it difficult for BOE rate-setters to gauge the tightness of the labor market, clouding the outlook for interest rates. Criticism from the central bank has intensified in recent weeks.
While the ONS has since reinstated the official estimates, doubts over their accuracy remain and the ONS is developing a new “transformed” LFS to replace the original survey. Bloomberg first reported last month that it could take until 2027 for a full transition to the new “online-force” survey.
‘Allow Time’
“Aiming to complete this process in 2027 would allow us time to implement the shorter survey with further periods of parallel run,” the ONS said.“We are continuing to explore options to minimise the timeframe to transition.”
The ONS also released small revisions to its current labor market indicators alongside the update, taking into account estimates of a bigger population.
While the unemployment rate in the three months through June was unchanged at 4.2%, the employment rate was 0.1 percentage point higher 74.6% and economic inactivity was 0.1 percentage point lower at 22.1%. The level of employment, however, was 402,000 higher than previously thought at 33.5 million in the second quarter and 313,000 higher than before the pandemic, whereas it was previously thought to be little changed relative to February 2020.
The update is unlikely to assuage concerns at the BOE over the reliability of the official estimates after a plunge in response rates to the Labour Force Survey.
While they have still cut rates twice this year, officials have pledged a cautious approach to more reductions due to concerns over lingering domestic price pressures.
Pressure on the ONS has intensified in recent weeks after sharp criticism from BOE rate-setters. Policymaker Swati Dhingra slammed the statistics agency over the problems, saying that if India can produce accurate labor market data with a population of more than 1 billion, Britain should be able to do so too.
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