UK Jobless Rate Highest Since 2016 On Tough Lockdown Restrictions

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The UK unemployment rate rose to a four-year high and the employment rate continued to decline in the three months to November as the second wave of the Covid-19 pandemic added pressure on economic activity.

The jobless rate rose 0.6 percentage points from the previous quarter to 5 percent in three months to November, labor force survey results from the Office for National Statistics showed Tuesday. This was the highest since early 2016 but below economists’ forecast of 5.1 percent.

The extension of the furlough scheme from October 31, 2020 to April 30, 2021 has been effective in preventing another surge in job losses, Thomas Pugh, an economist at Capital Economics, said.

The labor market will probably continue to weaken over the rest of the year, especially once the furlough scheme finishes at the end of April, Pugh noted. But a rapid rebound in GDP in the second half of this year should prevent the unemployment rate from reaching the global financial crisis levels of 8.4 percent.

“The prospect of extending lockdown makes it urgent that the Chancellor acts now to extend job and business support,” Matthew Percival, CBI Director of People and Skills, said. “The Job Retention Scheme needs to run to at least the end of June to avoid a cliff-edge.”

ONS data showed that the employment rate dropped 0.4 percentage points sequentially to 75.2 percent. Employment decreased by 88,000 on the quarter.

The number of people out of work increased by 202,000 on quarter to 1.72 million in three months to November.

Average earnings including bonuses increased 3.6 percent from last year versus the expected growth of 2.9 percent. Average earnings excluding bonus also grew 3.6 percent compared to forecast of 3.2 percent.

In December, the claimant count rose to a seasonally adjusted 7.4 percent from 7.3 percent in November. Jobless claims increased by 7,000 from the previous month to 2.6 million.

The redundancy rate reached a record high of 14.2 per thousand.

The material has been provided by InstaForex Company – www.instaforex.com

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