Labour Market ‘Broadly stable’

Extract from Redwood Financial’s Economic Review April 2021

ONS has described the jobs market as “broadly stable in recent months,” after its latest set of statistics revealed a small decline in the number of employees on company payrolls, alongside a dip in the rate of unemployment.

According to the latest data, 56,000 fewer people were in payrolled employment in March than in February, the first monthly decline in this measure of employment in four months. Over the year to March, a total of 813,000 payroll jobs were lost across the UK, with younger age groups bearing the brunt of these cuts.

The country’s latest unemployment rate, however, which covers the December to February period, unexpectedly fell for the second month in a row. The overall rate dipped to 4.9% across the three months to February, down from 5.0% in the previous three-month period.

Government support measures have clearly been a key factor behind the suppressed rate of unemployment, with around five million people still employed but on furlough. In addition, ONS linked the recent fall to a large volume of men exiting the jobs market, with the inactivity rate rising by 0.2 percentage points in the latest three-month period.

Commenting on the data, ONS Director of Economic Statistics Darren Morgan, said the labour market “remains subdued” although he also stressed there were positive signs particularly with respect to the easing of lockdown restrictions. Mr Morgan said, “With the prospect of businesses reopening, there was a marked rise in job vacancies in March, especially in sectors such as hospitality.”

Indeed, experimental data being trialled by ONS reported a 16% rise in vacancies during March, while online job advert estimates also point to further strengthening in the first two weeks of April. This echoes KPMG and REC research findings, which highlighted a recent significant improvement in recruitment activity.

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