Record high payrolls ‘reflect jobs recovery’
BANK OF ENGLAND MONITORING UNEMPLOYMENT RATES AND WAGE GROWTH
BRITISH employers increased their payrolls to a record high in September, shortly before the end of the wage subsidies scheme, potentially encouraging the Bank of England’s (BoE) progress towards a first post-pandemic interest rate hike.
The number of workers on companies’ books rose by the most on record in data going back to 2014, up by 207,000 from August.
Employers turned to recruitment agencies to find staff and hotel and food firms created jobs as they recovered from Covid-19 lockdowns.
“The jobs market has continued to recover from the effects of the coronavirus,” said Darren Morgan, the economic statistics director of the Office for National Statistics (ONS).
Separate official data published on Tuesday (12) showed the unemployment rate edged down to 4.5 per cent in the three months to August, from 4.6 per cent in the May-July period.
The BoE is gearing up to become the first major central bank to raise rates since the coronavirus crisis struck. Inflation is heading towards four per cent or higher, above its two per cent target.
But the BoE is watching to see how many people became unemployed after the end of the government’s furlough programme that subsidised wages to keep people employed during the pandemic.
About one million people are likely to have been on the scheme when it ended on September 30, according to an estimate by the Resolution Foundation thinktank.
The BoE is also monitoring pay growth as it tries to gauge how persistent a recent jump in inflation is likely to be.
Average weekly earnings in the June-August period were 7.2 per cent higher than in the same three months of 2020, slowing from the previous reading of 8.3 per cent. Excluding bonuses, earnings rose by six per cent, also losing some momentum.
The ONS estimated the underlying pace of wage growth, taking into account how job losses during the lockdowns affected predominantly lower-paid workers, was between 4.1 per cent and 5.6 per cent for regular pay in nominal terms. That compared with regular pay growth of about three per cent just before the pandemic hit.
Vacancies surged to almost 1.2 million in September, reflecting ongoing labour shortages after the pandemic and Britain’s post-Brexit controls on workers from the EU, which has made it harder for some employers to find staff. A shortage of fuel tanker drivers led to the supply of petrol and diesel being disrupted this month.
But there were still signs of caution on the part of employers, who hired many more part-time workers than full-time staff in the three months to August.
The Resolution Foundation said the widest measure of economic activity – hours worked – remained 2.7 per cent down on pre-pandemic levels, but the gap was likely to close in next month’s data.