There’s a puzzling aspect to this recession. Contraction in the economy is usually accompanied by a much more visceral indicator – a contraction in the employment rate and a rise in unemployment. But not this time.

The economy contracted by 0.7% during the second quarter of the year. During that springtime shrinkage, employment levels rose. And they did so markedly – some 181,000 were in work from March to May than there were during the winter. As you might, expect unemployment – defined as those who are actively seeking work and able to start one if offered – also fell, by 65,000 on the previous quarter.

So why the paradox? As the total size of the economy has shrunk why are more people working in it? Maybe because UK companies are producing just as much as they were, but their profit margins are considerably smaller than they were in better times. There is some anecdotal evidence for this. Sky News reported recently that as its economics reporters toured the UK they had found that a surprisingly high proportion of companies were operating at capacity, thus recruitment rates were holding up. But the companies are making less money for a similar level of staffing.

I was struck by a blog post on Politicalbetting.com: “I run an electrical contracting firm employing 50 people and we are busier than we have ever been,” it said. “However our profits are down 80% from what we achieved in 2006. We have just won a job rewiring council houses. We won a similar job in 2004 with the same main contractor. Our tender price in 2012 is less than we won the job for in 2004, despite the price of materials increasing by 35%. My sparks [electricians] have not had a pay rise for four years. We have to do this or we would not win any work. Our turnover figure is down, our profits are down, yet we employ 10% more people than our best year in 2006.”

It is possible to argue that this isn’t bad news. Most people consider the level of employment and unemployment be the most important economic indicators – simply because being out of work and unable to find a job is more unpleasant than simply being aware that the economy is shrinking. Maybe there has been a shift: perhaps each pound of profit requires more people to accrue it than it did when consumers were flusher. In any event, the anecdotes may go some way to explaining one of the strange paradoxes of our receding economy.