Business

Unemployment falls to 4.7% as job vacancies hit record high

According to the ONS, the fall in unemployment was met by a record high 953,000 job vacancies in Q2, up 43.8% from the previous quarter

UK unemployment fell to 4.7% for the quarter to 30 June 2021, a drop of 0.2% when compared to the previous three month period.

According to the ONS, this was coupled by a 0.3% rise in the UK employment rate to 75.1% in the same period, closing the gap with pre-pandemic levels to 1.5%.

However, the fall in unemployment was met by a record high 953,000 job vacancies in Q2, up 43.8% from the previous quarter.

Only one industry, wholesale and retail trade and repair of motor vehicles, had job vacancies remain lower than pre-pandemic levels during the three months to 31 July FY21.

Despite average total pay including bonuses climbing 8.8% and regular pay excluding bonuses jumping 7.4% in the quarter to 30 June FY21, the ONS recognised that the pandemic has inflated headline figures.

Jonathan Athow, deputy national statistician for economic statistics at the body, said that a “base effect” of comparing to when workers were furloughed or had reduced hours makes it seen that “we have a higher growth rate this year” as “some wages were falling last year”.

He added that earnings have been skewed by “compositional effects”, as those on lower wages were “at greater risk of losing their jobs” the average earnings of those employed increased during the pandemic.

Although the total hours worked increased by 50.9 million hours from Q1 FY21, this still represented a 4.8% drop from the final three full months before the initial Covid-19 lockdown.

Jack Kennedy, UK economist at Indeed, said: “The jobs market is going from strength to strength. Between May and July there were close to a million job vacancies as employers ramped up their hiring.

“Such record breaking numbers give a snapshot of the strength of the recovery, and reveal that the pace of hiring has finally accelerated well past its pre-pandemic level.”

He added: “Perhaps most encouraging of all is the fact that the momentum seems to have taken the gradual winding down of the furlough scheme in its stride. Separate data from the ONS shows that by the end of July just 1.5% of businesses’ workforce were still on full furlough.

“So far there’s no sign that the withdrawal of the furlough safety net is leading people to lose their jobs. In fact the redundancy rate fell during the past quarter and is now back to its pre-pandemic level.”

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