UK unemployment rate falls despite end of job furlough scheme
Unemployment in the UK fell in October despite the end of the furlough scheme, according to official figures, as companies continued to hire amid record numbers of staff vacancies.
The Office for National Statistics said the unemployment rate fell to 4.2% in the three months to the end of October, representing about 1.4 million people, down from 4.3% in the three months to the end of September.
Reflecting a continued recovery in the labour market after the end of the Treasury’s multibillion-pound job support scheme in September, it said the number of workers on company payrolls rose by 257,000 in November from a month earlier - the largest monthly rise in payroll employment on records dating back to 2014.
Fuelled by growth in part-time work since the easing of lockdown measures earlier this year, the increase lifted the number of workers on company payrolls to about 29.4 million – almost half a million higher than pre-Covid levels.
The ONS said it was likely that some furloughed workers could yet move into unemployment because they might be working out their notice periods, but that the early responses to its business surveys suggest the numbers being made redundant were likely to be small.
Darren Morgan, the director of economic statistics at the ONS, said: “With still no sign of the end of the furlough scheme hitting the number of jobs, the total of employees on payroll continued to grow strongly in November, although it could include people recently made redundant but still working out their notice.”
It comes as the Bank of England considers whether or not to raise interest rates on Thursday for the first time since the onset of the pandemic.
Threadneedle Street’s rate-setting monetary policy committee (MPC) unexpectedly held back from taking action last month, preferring to wait and see if the end of the furlough scheme had a significant impact on the jobs market.
However, analysts believe the emergence of the coronavirus Omicron variant will force the Bank to delay action this month amid rising concern over the worsening economic outlook.
Suren Thiru, the head of economics at the British Chambers of Commerce, said: “While current labour market trends provide no barrier to raising interest rates, uncertainty over the economic impact of the Omicron variant means a December rate hike is unlikely. Interest rates may start rising from February 2022, but only if concerns over the new variant have faded.”
According to the latest snapshot, the number of job vacancies continued to rise to a fresh record high of 1.2m despite some early signs of a slowdown in the growth rate.
The ONS said that annual wage growth, excluding bonuses, fell back slightly to 4.9% in the three months to October, down from 5% in the three months to September, as distortions in the pay data caused by the pandemic gradually fade.
Although settling at a rate marginally higher than the pre-pandemic trend, single month growth figures for October suggest the rate of growth slipped to 3.8% – falling below the rate of inflation for the first time since June 2020.
The ONS warns against too much weight on single-month figures, preferring to use a rolling three-month average. However, the drop could signal the start of a squeeze on living standards from surging inflation outpacing wage growth, in a development expected to last well into 2022.
With the fall in headline unemployment to 4.2%, the jobless rate remains 0.2 percentage points higher than in February 2020 before the onset of the pandemic.
Although the jobs market remained robust last month, economists warned that tougher government restrictions and a sharp rise in consumer caution in response to Omicron could damage the jobs recovery.
Business leaders and trade unions have warned the government will need
to step in with emergency financial support for companies and their workers, warning that the outlook for jobs was deteriorating fast.
Frances O’Grady, the general secretary of the TUC, said a reboot of furlough was required alongside additional support for the hardest-hit sectors of the economy. “It is good to see jobs were recovering – but the situation has changed since these figures … We need a plan B to protect jobs and livelihoods now,” she said.