U.K. Jobs Market Better Than Feared During November Lockdown
(Bloomberg) -- The U.K. labor market proved more resilient than expected in the three months to November as an extension of government aid helped protect jobs amid a widespread lockdown.
The nation’s unemployment rate climbed to 5% in the period, the highest since 2016 but lower than the 5.1% predicted by economists, the Office for National Statistics said Tuesday. The number of people in work fell by 88,000, the least since July, while the pace of increase for job cuts slowed.
“Once again the U.K. labor market surprised to the upside,” said Karen Ward, chief market strategist at JPMorgan in London. “The furlough scheme has been the central tenet of the government’s economic response to Covid-19 and has worked well.”
There were also signs of recovery amid a brief reopening of the economy in December, with tax data showing the number of employees on payrolls rose by more than 52,000 in the month. Still, the total number of people who have had lost their jobs since the crisis began stood at 828,000.
The spike may have been more pronounced but for an eleventh hour extension of the government’s furlough plan, announced alongside details of November’s lockdown on Oct. 31.
That support, which helped protect almost 10 million jobs in 2020, has been vital to the U.K. labor market’s performance during the crisis, with the unemployment rate only climbing by around 1 percentage point even as the economy saw its worst recession in three centuries.
Such a move may further dampen the peak of unemployment after the crisis, which the government’s fiscal watchdog last year predicted could be 7.5%.
What Bloomberg Economics Says:
“A decision to extend the scheme would limit the rise in unemployment, and in doing so make it more likely the economy experiences a rapid recovery when restrictions are eventually lifted.”
-- Dan Hanson, U.K. Economist. For the full REACT, click here
New figures on Tuesday also showed the regional impact of job losses in 2020, with London seeing the steepest percentage fall in payrolled employees, followed by northeastern Scotland.
The fall in employment in the latest quarter reflected the loss of part-time work, with accommodation, arts and recreation particularly hard hit. The number of people working full time rose almost 100,000. Unemployment rose by 202,000 to 1.72 million. A contributing factor was people previously declared inactive joining the search for work. Vacancies rose in the fourth quarter.
Average earnings growth jumped to 3.6%, but the surge reflected the loss of lower-paid jobs and and increase in full-time employment. Underlying growth was less than 2%, the ONS said.
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