The strong employment data comes as the British government prepares to end its licensing program on September 30, which helped around a third of employees at its peak, and was still supporting some 700,000 workers at its peak last month. full time.
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Tuesday’s figures mark a rebound from weak economic data in July, when Britain’s recovery slowed to a slow pace as hundreds of thousands of workers had to stay home after being notified of contact with people who they tested positive for Covid-19. British government bond yields rose after the data, with the two-year benchmark hitting its highest level since the start of the pandemic, as the figures revived questions about when the Bank of England might start trading. raise interest rates.
Businesses reported more than 1 million job openings in the three months through August, an all-time high, and the unemployment rate fell slightly to 4.6% in the three months through July, the Office for National Statistics said, in line with the Economists’ expectations in a Reuters poll.
“The latest data brought further signs that labor market slack is rapidly diminishing and that the labor shortage is contributing to faster underlying wage growth,” said Ruth Gregory, an economist at Capital Economics.
During the three months to July, the number of employed persons, which includes both the self-employed and salaried employees, increased by 183,000 to 32.4 million, in line with forecasts.
“Today’s statistics show that our employment plan is working,” said Finance Minister Rishi Sunak.
The number of people working on this broader measure was still well below the record of 33.1 million just before the pandemic. Fewer people are self-employed and more report being unemployed or “inactive,” a category that includes many students, homemakers, and people no longer looking for work.
Companies reported 1.034 million job openings in the three months through August, the highest level since these records began in 2001.
Vacancies were especially high in sectors such as accommodation and food services, which laid off many workers last year, but have seen a boom in demand as COVID-19 restrictions eased in recent months.
The lack of some key workers, such as truck drivers and food processing workers, has caused temporary gaps on some supermarket shelves and on restaurant menus.
“The current supply and labor shortages are preventing further growth,” said Matthew Percival, director of personnel and skills for the Confederation of British Industry.
The CBI and other business groups have been asking the government to temporarily relax new post-Brexit immigration rules while training new workers.
Companies have reported that wage pressure has risen sharply. Official data on Tuesday showed that average weekly earnings in the three months through July were 8.3% higher than the previous year, just below the all-time high of 8.8% for the three months through July.
The ONS said these sizable increases should not be taken at face value, as low-paying jobs are more likely to have been cut over the past year, and fewer people are now on reduced pay.
The payment excluding bonuses increased 6.8% year-on-year in the three months through July, and the ONS said the real underlying rate was likely between 3.6% and 5.1%, still high by pre-pandemic standards.
Britain’s job market offers a challenge for the Bank of England as it tries to judge how persistent inflationary pressures and supply chain bottlenecks are likely to be.
Last month, half of the Bank of England policy makers judged that some basic conditions for a rate hike had already been met, but others noted that there was still significant slack in the labor market.
Gregory of Capital Economics said he expected the labor shortage to be temporary.
“The danger is that they persist for longer than expected, which will keep inflation high and the Bank of England to pull the trigger on the interest rate next year,” he added.
Financial market prices posted a prime rise to 0.25% from 0.1% in May, while economists polled by Reuters on average see one by the end of 2022.