Jobless rate drops as lifting of lockdown sparks hiring spree

People shopping on Oxford Street in central London
People shopping on Oxford Street in central London (PA Wire)
12:42pm, Tue 18 May 2021
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Britain’s jobless rate has fallen further and payroll numbers surged higher as employers began hiring again thanks to the easing of lockdown measures, according to official figures.

The Office for National Statistics (ONS) cheered “early signs of recovery” in the jobs market as the rate of unemployment fell once more, to 4.8% in January to March – the largest quarterly decrease since September to November 2015, and down from 4.9% in December to February.

More real-time figures showed UK workers on payrolls surged for the fifth month in a row in April as Britain’s economy began to spring back to life thanks to easing lockdown restrictions.

UK unemployment rate (PA Graphics)

The ONS said the number of payroll workers rose by 97,000 between March and April, while it added that job vacancies also continued to increase as shops and outdoor dining reopened last month.

The latest figures show that vacancies hit the highest level since before the pandemic struck, at 657,000 between February and April.

Estimates showed vacancies recovering close to pre-pandemic levels in early April as firms began rehiring ahead of an expected surge in pent-up consumer demand, the ONS said.

The fall in the unemployment rate came despite the country being in tight lockdown in the first three months of 2021, with the ONS saying many unemployed were no longer looking for work.

There remains, however, three quarters of a million people fewer on the payroll compared with the pre-pandemic peak

But the data also showed the toll taken by the crisis on the jobs market, with 772,000 fewer UK workers on payrolls than before the pandemic struck last spring.

Darren Morgan, director of economic statistics at the ONS, said: “The number of employees on payroll rose strongly in April as the economy began to reopen, continuing the improvement from its November trough.

“There remains, however, three quarters of a million people fewer on the payroll compared with the pre-pandemic peak.”

There were 1.6 million Britons unemployed in January to March, down 121,000 on the previous three months, according to the ONS.

And there were 32.5 million in employment, up 84,000 on the previous three months in a sign of resilience in the face of lockdown.

Chancellor Rishi Sunak said: “Protecting and creating jobs continues to be my top priority.

“While sadly not every job can be saved, nearly two million fewer people are now expected to be out of work than initially expected – showing our Plan for Jobs is working.”

UK payroll employees (PA Graphics)

The Bank of England recently slashed its forecasts for unemployment over the year, now predicting that the jobless rate will peak at 5.5%, down from the 7.75% previously forecast thanks to a more rapid economic bounceback expected in 2021.

The extension of the furlough scheme has helped soften the blow to unemployment, while the growth rebound is set to see most furloughed employees return to work when it ends.

But Samuel Tombs, at Pantheon Macroeconomics, cautioned that some hard-hit sectors will continue to suffer once furlough ends.

He said: “While most furloughed staff will return to their former roles, a significant minority won’t, especially in sectors such as retail where over-employment is rife.

“We expect redundancies to pick up again from July, when employers will have to cover 10% of the missing wages of any furloughed staff, and then jump in September, the final month of the scheme.”

The ONS data showed the claimant count – another measure that includes people working with low incomes and hours, as well as people who are not working – fell month-on-month to 2.6 million in April.

The figures also showed average pay excluding bonuses rose by 4.6% in the three months to March, yet with many jobs axed being lower-paid roles, the underlying increase is around 3%, the ONS said.

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