UK job market roars back, wages jump too

The number of workers on British firm payrolls surged in June by the most since the start of the coronavirus pandemic, according to data which painted a picture of a roaring jobs market and growing inflationary pressure from rising wages.

A day after a top Bank of England official said the time for the BoE to think about taking action on inflation might be approaching sooner than he had expected, tax data showed a 356,000 leap in employment in June from May.

The increase was driven by 94,000 more accommodation and food jobs, which were hit by lockdowns that have now been largely lifted, and a 72,000 rise in jobs in administration and support services, including temporary staff at recruitment agencies.

The headline unemployment rate for the three months to May stood at 4.8%, the Office for National Statistics said. Economists polled by Reuters had mostly expected it to hold at 4.7% seen in the three months to April.

Yesterday’s figures showed the fastest headline wage growth in the year to May since records began in 2000, although the comparisons have been skewed by greater job losses among low-paid workers and comparison with depressed wages a year ago.

The pick-up in hiring and in pay added to signs of how fast Britain’s economy is bouncing back from its nearly 10% crash last year when it was hit by one of the world’s heaviest Covid death tolls and long lockdowns.

The number of job vacancies in the three months to June rose by 241,000 to 862,000, the biggest quarterly increase since records began in 2001 and just short of the record-high total number of vacancies seen in late 2018.

Ruth Gregory, an economist with Capital Economics, said the labour market was well on its way to recovery but revisions to past figures, including lower employment than previously reported, suggested it could still absorb inflation pressure.

“While there is growing evidence that firms are finding it more difficult to hire workers, we suspect that most of these labour shortages will prove temporary and that they will be confined to a few sectors,“she said. – Reuters