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Signs of recovery as unemployment falls

by: Emma Lunn
  • 18/05/2021
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Signs of recovery as unemployment falls
UK unemployment rate dropped to 4.8 per cent in Q1 2021, 0.3 percentage points lower than the previous quarter, according to the Office for National Statistics (ONS).


Since the start of the pandemic, employment has generally been decreasing and unemployment increasing. However, the latest estimates for January to March 2021 show signs of recovery, with a quarterly increase in the employment rate.

The employment rate was estimated at 75.2 per cent in Q1 2021, 1.4 percentage points lower than the quarter before the pandemic (December 2019 to February 2020), but 0.2 percentage points higher than the previous quarter.

The ONS says the latest figures suggest that the jobs market has been broadly stable in recent months, with some early signs of recovery.

The number of payroll employees has increased for the fifth consecutive month but remains 772,000 below pre-coronavirus pandemic levels. Since February 2020, the largest falls in payrolled employment have been in the hospitality sector, among those aged under 25 years, and those living in London.

Job vacancies

The number of job vacancies in February 2021 to April 2021 remained almost 128,000 below the pre-pandemic level in January 2020 to March 2020. The worst affected industries were arts, entertainment and recreation, and accommodation and food service activities.

But in February 2021 to April 2021, there were an estimated 657,000 job vacancies, which is a growth of 8 per cent (48,400) compared with the previous quarter.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Pinch yourself, because there’s good news from the labour market. Overall unemployment is down slightly, employment is up, the redundancy rate has fallen by a record during the quarter and vacancies soared in March. However, we’re not out of the woods just yet.

“We’re still below the pre-pandemic employment rate, but signs of recovery are a welcome relief. Official quarterly job vacancies also remain below pre-pandemic levels, but early experimental data for March showed a surge to the highest point since the start of the crisis, as restaurants, hotels and bars ramped up recruitment ready for reopening.”

Jack Kennedy, UK economist at the job site Indeed, said: “The unlocking of the economy is thawing out Britain’s labour market, and the fires of job creation are being stoked by the gradual return to normal life.

“Nearly 100,000 new employee jobs were created in April, the biggest monthly jump for over six years. The number of people on employer payrolls has clawed its way to 190,000 above the nadir it endured during the first lockdown last year. Despite this progress, it’s still a shadow of its pre-pandemic self – and it remains 772,000 down on the pre-Covid number.

“At the same time the headline rate of unemployment has fallen, and while this progress is impressive, it’s not just a case of all those unemployed people suddenly moving into paid work. The reality is many of those formerly unemployed people stopped looking for work during the third lockdown, meaning they disappeared from the official jobseeker total. Nevertheless an unemployment rate of 4.8 per cent is a step in the right direction, and there is a growing sense of momentum in the labour market.”

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