Tuesday 23 January 2018

Marc Coleman: Job-creation victory is more of a Borodino than a Waterloo

Employment may be up, but data shows that the domestic economy is still shrinking

Marc Coleman

Marc Coleman

If this recession were a war, and in one way it is, then Wednesday's news on employment would count as news of an important battle victory from the front: employment in the fourth quarter was 7,600 up on the three months before, up 12,700 on the middle of 2012 and 23,900 higher than the start of last year.

Don't cheer too loudly yet. If this is a victory, it is more of a Borodino than a Waterloo. For the less historically inclined, Borodino was a far less famous victory than Waterloo but arguably much more important: in it the Russians didn't beat Napoleon exactly, nor stop his advance toward Moscow. What they did do was greatly reduce his army in size and break its morale and forward momentum until time – and Russian weather – did the rest.

Referring to the employment figures, EU President Barroso told us on Thursday that the enemy had been turned. But officialdom – and establishment-friendly pundits – should be careful with this message. We have been here before, a month ago, with promising anecdotes and hopeful consumer sentiment data. But a day after Wednesday's employment data, the gap between punditry and officialdom on one hand and reality on the other was laid bare by data on the real economy. Data that shows the domestic economy is still shrinking.

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