Bank of England Faces Economic Uncertainty as ONS Jobs Data Quality Declines

Policymakers at the Bank of England and the Treasury are now navigating economic decision-making with less confidence, as the quality of labour market data from the Office for National Statistics (ONS) continues to erode. The ONS recently revealed a drop in the response rate to its jobs survey for the first time in nearly two years. The figure slipped to 21.1 per cent in the second quarter of this year, down slightly from 21.3 per cent in the first three months, breaking its modest upward trend since hitting an all-time low of 12.7 per cent in 2023.

This statistical dip has drawn sharp criticism. Senior officials, including Bank of England governor Andrew Bailey, have underlined the importance of reliable employment data in setting interest rates and shaping monetary policy. Dame Meg Hillier, Labour chairwoman of the Treasury committee, has described this latest setback as a significant blow for those charged with steering the UK economy. Economists echo these worries, arguing that the data’s declining robustness makes it increasingly difficult to form an accurate picture of the country’s financial health.

The less responsive public is not a uniquely British challenge—nations across Europe and the United States have reported similar problems. Efforts by the ONS to improve data collection, including increased investment and changes to interview techniques, have yet to fully resolve the issue. The agency has embarked on a wide-ranging overhaul, introducing a “transformed labour force survey” that promises more up-to-date and reliable data. However, this major update has faced delays, with completion not expected for another two years.

The situation is exacerbated by leadership turmoil at the ONS. The abrupt resignation of Sir Ian Diamond, the organisation’s former chief, has left its direction in a state of flux. An official investigation published in June laid bare deep-seated cultural issues and insufficient investment in maintaining vital datasets. Sir Ian made clear that the agency’s reputation cannot be hung on the actions of one person alone, stressing the complexity of the challenges faced.

The stakes could hardly be higher. Labour market figures underpin decisions such as interest rate movements, so a miscalculation risks misaligning monetary policy with the true state of the economy. Market participants and policymakers alike find themselves acting without the clear guidance once provided by trusted official statistics, prompting calls for urgent and decisive improvements in data collection.

The ONS reports some progress in restoring response rates, with the initial wave of its new survey returning to levels seen before the pandemic. Nonetheless, economic analysts contend that, until these efforts deliver sustained results, crucial indicators such as unemployment and pay growth should be interpreted with caution rather than treated as the last word on Britain’s economic reality.