UK’s unemployment rate dips to 4.8% as lockdown eases

Bloomberg

The UK labour market strengthened more than expected in April as the economy began to emerge from coronavirus
restrictions.
The number of people on payrolls rise 97,000, and vacancies increased 13%, the Office for National Statistics said on Tuesday. The jobless rate in first quarter falls unexpectedly to 4.8% as employment surged 84,000, the first gain since the pandemic struck.
The jobs outlook has improved significantly in recent months, with the government announcing plans to fully reopen the economy by June 21 and then extending wage support for furloughed workers until the end of September. It’s shifted the debate toward when the Bank of England will start tightening monetary policy.
“We are likely to see the number of vacancies mounting further,” said Tej Parikh, chief economist at the Institute of Directors. “Some firms may even be unable to find and onboard staff as quickly as they need to.”
The central bank now expects unemployment to peak at just 5.4% in the third quarter instead of a previously estimated 7.9%, despite the economy last year experiencing its deepest contraction in three centuries.
A separate study published on Tuesday showed that over the longer term, Britain is facing a decade of major change that could leave it economically on par with Italy instead of leading the pack of European nations. The Resolution Foundation and the Centre for Economic Performance at the London School of Economics said the pandemic, Brexit, climate change targets and a drop in the population threaten to make the UK poorer in the decades ahead.
England this week took its biggest step yet towards returning to normal life with the reopening of indoor hospitality for the first time in five months. In April, non-essential stores welcomed back customers. In a further boost, Amazon Inc said last week it will hire 10,000 more people in the UK.
However, hopes for the strongest economic rebound in decades are being overshadowed by the highly transmissible Indian variant of coronavirus, which has been found in dozens of districts across the country. Prime Minister Boris Johnson has warned the final stage of lifting restrictions could be delayed by the outbreak and urged
people to get vaccinated.
Unemployment is set to peak at a far lower level than in the aftermath of previous recessions. That’s largely due to the tens of billion pounds of public money spent on keeping furloughed employees on payroll. Economists assume that only a fraction of 4.2 million people furloughed at the end of March will end up out of work.
In the hospitality sector, many firms are struggling to fill vacancies. Restaurants and leisure venues relied heavily on migrants workers, many of whom left the UK during the pandemic. Others are reluctant to return to an industry facing an uncertain future. Still the crisis leaves an uneven mark on the labour market.
A key challenge for the government is getting young people back to work, with unemployment among 18 to 24-year-olds running at double the national average.
Average wages excluding bonuses grew 4.6% in the quarter through March. However, the figures have been skewed by the loss of lower-paying jobs, and the ONS estimates the underlying growth rate is around 3%. Pay and inflation pressures could be fuelled by labour shortages.