While the overall participation rate has continued to trend down, there has been a sharp rebound in the share of 25-54 year-olds in the labour force. This has added 1½ million additional people to the labour force over the past eighteen months.
It is obviously a positive sign that the strength of the labour market now appears to be reaching groups previously left out of the recovery. However, a breakdown of the underlying drivers suggests that there is little scope for prime-age participation to rise much further. Accordingly, it seems likely that the overall participation rate will fall in the years ahead, meaning that further employment gains will begin to put more upward pressure on wage growth.
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