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Livesquawk - Re-emergence From Lockdown Keeps UK Jobs Market Recovery On Track
Re-emergence From Lockdown Keeps UK Jobs Market Recovery On Track

 

- Payrolled job ranks increased for the seventh straight month

- Redundancies decline on the quarter

- Total actual weekly hours worked higher in 3M to May

- Vacancies now back to pre-pandemic levels

- Higher wages affected by compositional and base effects

 

By Harry Daniels

LiveSquawk News

@HarryDaniels71

 

 

15 July 2021|10:45 GMT

 

 

London - The latest UK labour market report has highlighted the continued jobs recovery after the hospitality sector reopened following lockdown. For the first time since the beginning of the crisis, some regions returned above pre-pandemic employment levels.

 

The Office for National Statistics said the number of payroll personnel showed another monthly increase, up 356,000 in June to 28.9 million. The office’s estimates of employment change showed an increase of 25,000 in the three months to May. This was below the 91,000 forecast and the 113,000 added last month. Over the same period, underlying data showed that the employment rate increased 0.1 percentage points to 74.8%.

 

However, the rate of hires has slowed from the pace immediately succeeding the relaxation of restrictions. In March-May, the UK unemployment rate was estimated at 4.8%, up a tenth compared to last month and 0.9 percentage points higher than before the pandemic. Compared to the previous quarter, the rate was 0.2 percentage points lower.

 

The ILO jobless claims change fell 114,000, missing predictions of a 151,4000 drop. This left unemployment a modest 68,000 lower in the three-month comparison.

 

Investec Economics’ Sandra Horsfield said, “At first glance, today’s UK labour market report looks a disappointing one. Dig a little deeper, however, and the picture looks entirely different. The timelier measure of employment in HMRC’s Real-Time Information PAYE data, which captures all payrolled employees rather than being based on a survey scaled up by population estimates, reported a rip-roaring monthly net rise of 356,000 (1.3%) in June, after an already eye-watering gain of 212,000 (0.7%) in May, following the easing of Covid restrictions.”

 

Heyday for payday

There was also positive news regarding pay levels. On an annual basis, total average weekly wages in the three months to May increased 7.3% versus the 7.1% expected and were up from 5.7% previously. Pay excluding-bonuses rose in line with estimates to 6.6% versus 5.7% last month. “The figures are distorted by workers returning to full pay from furlough and by changes in the composition of jobs,” noted Horsfield.

 

UK statisticians said hours worked increased on the quarter, reflecting the relaxation of coronavirus restrictions. In the three months to May, total actual weekly hours rose 23.3 mln hours from the previous quarter to 981.4 mln.

 

The economic inactivity rate was estimated at 21.3%, 1.1 percentage points higher than before the pandemic, and 0.1 percentage points higher than the three months to April.

 

The number of job vacancies in April to June was 9.9% (77,500) above its pre-pandemic level in January to March 2020, the first time it has surpassed this level in 15 months.

 

“These data coincided with 5.6% of the UK workforce on either full or partial furlough. Given the strength in labour demand, this poses a puzzle,” Citi’s Benjamin Nabarro noted. “We think these observations can be explained by persistent compositional differences between labour demand and employment now versus that before the pandemic. This suggests furlough is acting now to limit labour supply by trapping employees in firms that are unlikely to be viable in the longer term.”