UK Unemployment Rate Drops As Expected
The UK unemployment rate dropped in the three months to April, as businesses increased hiring in response to the easing of restrictions related to the coronavirus pandemic, official data revealed Tuesday.
The unemployment rate dropped 0.3 percentage points quarterly to 4.7 percent in three months to April, the Office for National Statistics reported. The rate came in line with economists’ expectations.
At the same time, the employment rate rose 0.2 percentage points to 75.2 percent. The ONS said the latest estimates continued to show signs of recovery in the labor market.
The number of payrolled employees increased for the sixth consecutive month, up by 197,000 in May to 28.5 million.
The recent relative calm is unlikely to last and the remaining months of 2021 are likely to be turbulent for the UK jobs market, James Smith, an ING economist, said.
Unemployment is set to rise come the end of the furlough scheme in September,
although the spike will be considerably less pronounced than it might have been had support ended earlier, the economist noted.
Annual growth in average employee pay has continued to increase. However, this was driven by compositional effects of a fall in the number and proportion of lower-paid employee jobs, the ONS said.
Average earnings including bonus grew 5.6 percent annually in three months to April, well above economists’ forecast of 4.9 percent. Likewise, excluding bonus, earnings were up 5.6 percent versus the expected rate of 5.3 percent.
The level of employment is still well below its pre-crisis level and underlying wage growth is much weaker than the headline number, suggesting there is still plenty of slack in the labor market, Thomas Pugh, an economist at Capital Economics, said.
The slack in the labor market will prevent a big rise in underlying pay putting upward pressure on inflation, Pugh noted.
In May, claimant count dropped 92,600 from the previous month, data revealed. The claimant count rate fell to 6.2 percent from 6.4 percent in April.
The number of job vacancies in March to May was 758,000, only 27,000 below the level before the coronavirus pandemic in January to March 2020.
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