The pound has remained supported despite US dollar strength, helped by positive jobs data released this Tuesday morning. The good UK jobs data is also supporting expectations of further interest rate hikes by the Bank of England (BoE).
Chancellor of the Exchequer, Rishi Sunak, has welcomed today’s data and said that the “figures are proof that the jobs market is thriving, with employee numbers rising to record levels, and redundancy notifications at their lowest levels since 2006 in December.”
Unemployment rate drops
The jobless rate fell to 4.1% during the quarter of September and November, according to the Office for National Statistics. After the end of the furlough scheme, the labour market has proven to be resilient and has continued to grow stronger in November. While wage growth slowed down, it remained above 4.2%.
The ONS estimates that employers added 184,000 more staff in December, pushing payrolls higher, to 409,000, which represents 1.4%, above pre-pandemic levels.
Vacancies increased too, with 1,247,000 vacancies in October-December. Most industries have shown a high number of vacancies, but the ONS warned that the rate of growth in vacancies has slowed. There are 462,000 more vacancies than before the pandemic. The redundancy rate has fallen which means that the end of the furlough scheme did not significantly affect the jobs market.
Economic inactivity rate rose by 0.2% to 21.3%. This suggests that an increasing number of people have left the labour market, either because they have retired, started studying or are ill.
Consumer price inflation (CPI) rose to 5.1% in November and is expected to hit 6% by this spring when energy bills increase.
The ONS reported that wages fell as prices rose in November: “In real terms (adjusted for inflation), total and regular pay have shown minimal growth in September to November 2021, at 0.4% for total pay and 0.0% for regular pay; single-month growth in real average weekly earnings for November 2021 fell on the year for the first time since July 2020, at negative 0.9% for total pay and negative 1.0% for regular pay.” The ONS showed that public sector was hit by the pay squeeze: “Average total pay growth for the private sector was 4.5% in September to November 2021, while for the public sector, it was 2.6%; all sectors saw growth, with the finance and business services sector seeing the largest growth rate at 6.8%.”
Cost of living
The UK’s cost of living is going to get worse according to Stephen Evans, chief executive of Learning and Work Institute. He warned that 2022 “will be dominated by the cost of living crunch and labour shortages.” He stressed that today’s data has shown that prices rose faster than wages, and with inflation pushing higher and further tax rises households will struggle. He clarified that the total number of working people was still below pre-pandemic levels, while the growing number of those being sick meant that there are now one million less people working than before the pandemic.
The chancellor, Rishi Sunak, highlighted the positive figures and said the government’s plan for jobs was creating opportunities for all including traineeships for young people and sector-based work academies for those changing careers.
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