Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
The UK labour market is in a better state that expected, but conditions still remain tight, official data showed on Tuesday.
Joblessness was reduced and wages increased, though not by enough to keep pace with inflation.
The Office for National Statistics noted the unemployment rate had generally been falling since late 2013 up until the start of the Covid-19 pandemic in December 2019 to February 2020. It increased since then but has now returned to its pre-virus level.
The UK unemployment rate was estimated at 3.7% in the three months to May, 0.3 percentage point lower than the previous three-month period, and 0.2 percentage point below the pre-coronavirus pandemic level - which covers the period from December 2019 to February 2020.
The figure also beat the market consensus forecast, according to FXStreet, of 3.8%.
The employment rate was estimated at 75.7%, 0.1 percentage point higher than the previous three-month period but 0.9 percentage point lower than before the coronavirus pandemic.
‘The increase in the employment rate was driven by the movement of people aged 16 to 64 years from unemployment to employment. However, there was also a record-high movement of people from economic inactivity into employment. Total job-to-job moves also increased to a record high of 994,000, driven by resignations rather than dismissals, during the January to March 2022 period,’ the ONS explained.
Capital Economics Chief UK Economist Paul Dales said: ‘The labour market has remained stronger than expected even though the economy has been weaker than anticipated. This supports our view that the Bank of England will have to raise interest rates further than widely expected, perhaps from 1.00% now to 3.00% next year.
‘The acceleration in the three-month change in Labour Force Survey employment from up 10,000 in February to up 83,000 in March, versus consensus of 5,000, is particularly encouraging as it was driven by a huge 503,000 rise in the single-month of March offsetting the falls in January and February. That suggests weakening in GDP growth during Q1 has yet to weigh on jobs growth.’
The ONS also released figures showing regular pay, which excludes bonuses, in the UK was up 4.2% year on year in January to March - in line with expectations.
Average total pay growth for the private sector was 8.2% in January to March 2022, and for the public sector was 1.6% in the same time period.
However, in real terms - adjusted for inflation - in January to March 2022, growth in total pay, which includes bonuses, was 1.4%, but regular pay fell by 1.2% on the same period a year prior.
Copyright 2022 Alliance News Limited. All Rights Reserved.