Unemployment steady at 5% and 200,000 back on payrolls
Glimmers of hope? Unemployment holds steady at 5% and 200,000 people back on payrolls as businesses adjust to lockdown
- Latest ONS figures show payroll numbers continuing to recover after nosedive
- Payroll numbers now up 200,000 over past three months but still down overall
- Unemployment steady at 5 per cent, down 0.1% on three months to December
There were glimmers of hope for the UK labour market today with payroll numbers rising and unemployment holding steady at five per cent.
The latest figures show 68,000 more people were on payrolls in February, with the rise now 200,000 over the past three months – although the numbers are still down nearly 700,000 since the start of the pandemic.
Meanwhile, the unemployment rate stood at five per cent in the three months to January, according to the Office for National Statistics – barely changed from the previous quarter.
However, worryingly the increase in job vacancies has slowed and is still well below pre-pandemic levels.
The latest figures show 68,000 more people were on payrolls in February, with the rise now 200,000 over the past three months – although the level is still down nearly 700,000 since the start of the pandemic
The unemployment rate was five per cent in the three months to January, according to the Office for National Statistics
Chancellor Rishi Sunak’s decision to extend the Government’s furlough scheme is expected to keep unemployment lower than had originally been feared
The update was published on the one year anniversary of the UK being plunged into the first coronavirus lockdown.
ONS head of economic statistics Sam Beckett said: ‘After yet another monthly increase, there were almost 200,000 more employees on payroll in February than three months earlier, although that is still nearly 700,000 down from the start of the pandemic.
‘Of the decrease since then, almost two-thirds has been among the under-25s, over half has been in hospitality, and almost a third has been in London.
The Bank of England has suggested unemployment will peak at a lower level than the 7.8 per cent it previously feared, after Rishi Sunak moved to extend the Government’s huge furlough scheme until September.
Overall there were 693,000 fewer workers on payrolls than in February 2020, with more than half – 368,000 jobs – lost in the hospitality sector as lockdowns and restrictions hammered the industry.
The ONS added that 123,000 payroll jobs were also lost in the hard-hit retail sector while more than 60 per cent of the total fall over the past year was for those aged under 25 in a sign of the toll taken by the crisis on young workers.
The latest figures show the rate of unemployment stood at five per cent between November and January, down from 5.1 per cent in the previous three months.
Total unemployment stood at 1.7 million between November and January, up 360,000 over the year, the ONS said.
The figures show a slight improvement since the start of the pandemic, with 601,000 vacancies between December and February.
This is 26.8 per cent lower than a year earlier but the decline has eased steadily from a near-60 per cent drop last summer, though the ONS said the rate of improvement has slowed in recent months.
Official figures published earlier this month showed the economy contracted by 2.9 per cent in January as the lockdown took its toll.
However, this was less than feared and a far cry from the double-digit fall of last April at the height of the first wave of coronavirus.
The Office for Budget Responsibility (OBR) recently revised down its forecasts for unemployment to peak at 6.5 per cent by the end of the year – down from previous estimates made in November of 7.5 per cent.
This would equate to 340,000 fewer people out of work than previously thought thanks largely to the decision to extend furlough.
Responding to the latest jobs statistics, Mr Sunak said: ‘Coronavirus has caused one of the largest labour market shocks this country has ever faced, which is why protecting, supporting and creating jobs has been my focus throughout this crisis.
‘We have taken decisive action with a £352 billion package of support. The continued success of the vaccine rollout provides us with hope for the future and, through our Plan for Jobs, we will continue to support people throughout the months to come.’
Suren Thiru, the head of economics at the British Chambers of Commerce, said the payroll numbers suggested the UK jobs market is ‘becoming more resilient’.
He said: ‘Ongoing wage support, greater clarity provided by the government’s roadmap and the adaptations made by some firms to operate under lockdown restrictions helped support higher payroll employment in February.
‘Extending furlough will limit the peak in job losses. However, with many firms struggling with the damage done to their cashflow by a year of covid restrictions, unemployment is likely to remain on an upward trajectory until well beyond a full reopening of the economy.’
The ONS statistics show that the number of job vacancies has increased in recent months after crashing at the start of the pandemic
Meanwhile, the redundancy rate has fallen but it is still significantly above pre-pandemic levels
A recovery in the total number of weekly hours worked in the UK has stalled after the latest national lockdown was imposed in January
The latest figures also showed that the nation is still far below pre-pandemic levels of overall hours worked every week.
Between August to October 2020 and November 2020 to January 2021, total actual weekly hours worked saw an increase of eight million, or 0.8 per cent, to 968million hours.
The average actual weekly hours worked increased by 0.4 hours on the quarter to 29.9 hours.
However, the recovery in actual hours worked has stalled because of the national lockdown imposed in January.
Meanwhile, redundancies also remain higher than normal but they are now lower than the previous quarter.
In the period between November to January the ONS said that reports of redundancy increased by 7.2 per thousand on the year but decreased by 2.3 per thousands on the preceding three months to 11 per thousand.
