UK Jobless Rate Jumps, Employment Wanes

- Labour market suffers more damage than during global financial crisis

- Over 750,000 fewer employees on payroll since March

- Redundancies spiked by record amount in September

 

By Harry Daniels

Editor-in-Chief, LiveSquawk News

@ HarryDaniels71

 

10 November 2020 / 12.00 GMT

 

London (LS NEWS) – Employment at the end of summer experienced a marked slowdown as company layoffs and the perceived end of the first furlough scheme weighed on hiring sentiment.

 

In the three-months to September, the Office for National Statistics said estimates showed a large increase in the unemployment rate and a record number of redundancies while the employment rate continued to fall.

 

The office said joblessness increased on the quarter and the year for all age groups, with the annual rise driven by those unemployed for up to six months, an increase of 224,000 on the year to 1.04 million.

 

The unemployment rate rose to 4.8% from 4.5% three-months-on-three-months in September, in line with estimates but 0.9 percentage points above the level a year earlier. Employment fell by 164,000 over the same period, a larger decline than the -148,000 forecast. Employment has continued to fall over the course of the year and stands at an estimated 75.3%, 0.8 percentage points lower than a year earlier, and 0.6 percentage points lower than the previous quarter.

 

Redundancies spiked by a record 181,000 in the three months to September, with the lockdown now proving to be more damaging to the labour market than the Global Financial Crisis in 2009. ONS Deputy National Statistician for Economic Statistics Jonathan Athow said, “The latest monthly tax numbers show over three-quarters of a million fewer employees on the payroll in October than in March.”

 

Investec analyst George Brown said, “While the furlough scheme has helped to shield the UK labour market from the pandemic, the latest figures show that it is coming under increasing strain.”

 

The October claimant count data was more positive, falling by 29,800 to beat the expected 50,000 gain and the decline of 40,200 in September. Vacancies also continued to improve, with an increase of 146,000 in the three months to October.  

 

As a consequence of the latest month-long lockdown, the UK Treasury said recently that it would extend the job furlough scheme until March 2021. Analysts note that the announcement may delay further redundancies in the short-term.

 

Suren Thiru, head of economics at the British Chamber of Commerce, said the rise in the unemployment rate and redundancies are further evidence that the damage being done to the UK jobs market by the coronavirus pandemic is intensifying. “While there was a rise in the number of job vacancies, this is more likely to reflect a temporary bounce as the economy reopened before recent restrictions were reintroduced, rather than a meaningful upturn in demand for labour.”

 

Douglas Grant, director of Conister Finance & Leasing, said: “The latest lockdown measures in England will sadly be the last nail in the coffin for many companies which simply cannot receive capital quickly enough. It is clear that while the furlough scheme has been instrumental in keeping many small, medium size firms (SMEs) alive, not all businesses can or will be saved.”

 

Employment Flows