UK unemployment falls amid record rise in job vacancies

June and July figures show rocketing demand for workers as country emerged from Covid lockdown

Unemployment fell in June as workers made redundant during the pandemic appeared to respond to a record rise in vacancies to re-enter the labour market and secure a job.

According to official figures, the unemployment rate dropped to 4.7% in the three months to June, down 0.2 percentage points on the previous quarter. Data for July showed the number of job vacancies passed 1m for the first time on record, the Office for National Statistics said.

The proportion of the working population out of work is still higher than before the pandemic, when unemployment was 3.9%, but the reopening of the economy and the rocketing demand for workers in some industries has pushed up the number of people in work.

Separate figures for July from HMRC also pointed to a strong recovery in the labour market, even as almost 2 million people remained on furlough, after the number of payrolled employees increased by 182,000 to 28.9 million.

The figures beat the forecasts of City analysts, who expected the labour market to recover more slowly as lockdown restrictions eased.

Wages jumped 7.4% without bonuses and 8.8% including bonuses to reinforce the message from employers that where shortages exist, workers can expect to receive signing on fees and retention bonuses.

Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said the strong growth in the number of jobs this year and the rise in wages were unlikely to alter the view of the Bank of England, which has forecast that wages growth will lose momentum as the economy returns to more normal levels of activity.

He said: “Most public sector workers likely will see modest increases in their pay again next year, while job losses in the wake of the furlough scheme will help to keep a lid on private-sector settlements.

“Accordingly, we continue to think that the labour market will lose its current momentum, enabling the monetary policy committee to wait until the first half of 2023 to raise [interest rates].”

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Illustrating the mismatch between the demand for workers in industries from manufacturing to hospitality and the lack of skilled staff, the number of vacancies soared in July to 1,034,000 from the previous month while the three-month average to July increased by 290,000 to 953,000.

However, the data showed the number of hours worked remained almost 5% below pre-pandemic levels, and analysis by the ONS of wages showed that in stripping out “the coronavirus effect”, most wage rises were between 3.5% and 4.9%.

The number of employees also remained 201,000 below February 2020 levels, indicating that many self-employed people who lost work in the previous 16 months were still unable to return to the labour market.

The chancellor, Rishi Sunak, said: “Today’s figures show that our plan for jobs is working – saving people’s jobs and getting people back into work. I know there could still be bumps in the road but the data is promising – there are now more employees on payrolls than at any point since March 2020, and the number of people on furlough is the lowest since the scheme launched,.”


Phillip Inman

The GuardianTramp

Related Content

Article image
UK unemployment falls for first time in Covid-19 pandemic
Jobless rate drops to 5% in three months to January, representing 1.7 million people

Richard Partington Economics correspondent

23, Mar, 2021 @4:19 PM

Article image
UK paid employment falls by almost 650,000 as Covid-19 crisis bites
ONS says number of workers on payroll fell 2.2% from March although rate of decline fell in June

Richard Partington

16, Jul, 2020 @7:23 AM

Article image
UK unemployment drops as firms hire amid Covid easing
Rate fell for third consecutive month in three months to March, according to ONS

Richard Partington Economics correspondent

18, May, 2021 @3:44 PM

Article image
UK economy poised to recover after Covid-19 second wave
Our latest snapshot of key economic indicators shows the deficit soaring but unemployment holding steady

Richard Partington Economics correspondent

31, Mar, 2021 @5:00 AM

Article image
UK economy at the crossroads before lockdown ends
Our analysis of Covid effects on businesses examines work, growth and stock markets

Richard Partington Economics correspondent

25, Feb, 2021 @6:00 AM

Article image
Rishi Sunak says UK is bouncing back as payrolls soar in June
Number of workers on payrolls up by 356,000, with easing of Covid controls having impact on hiring

Larry Elliott Economics editor

15, Jul, 2021 @7:27 AM

Article image
The Brexit economy: looming rate rise clouds outlook as inflation dips
‘The beast from the east’ blew the UK economy off course, further complicating an already complex picture

Richard Partington

26, Apr, 2018 @12:21 PM

Article image
UK manufacturers record sharpest rise in optimism since 1973 as Covid recedes
CBI poll of 288 leading companies finds firms plan to hire at fastest rate in nearly 50 years

Richard Partington Economics correspondent

22, Apr, 2021 @12:49 PM

Article image
UK growth revised up to 5.5% amid higher NHS spending and exports rise
GDP grew faster than forecast in second quarter as fewer Covid restrictions prompted households and companies to spend

Larry Elliott Economics editor

30, Sep, 2021 @1:25 PM

Article image
UK job vacancies and numbers employed both hit record highs
Shortage of skilled staff helps raise pay but wage growth still lags behind inflation, official figures show

Phillip Inman

24, Jan, 2018 @5:16 PM