UK payrolls rise, unemployment rate falls
By Michele Maatouk
Date: Tuesday 16 Nov 2021
(Sharecast News) - The UK unemployment rate fell again in September, while the number of workers on payrolls rose despite the end of the furlough scheme, reinforcing expectations of a rate hike by the Bank of England.
According to figures released on Tuesday by the Office for National Statistics, the number of workers on payrolls rose 0.6%, or by 160,000 between September and October to 29.3m.
Sam Beckett, ONS head of economic statistics, said: "It might take a few months to see the full impact of furlough coming to an end, as people who lost their jobs at the end of September could still be receiving redundancy pay.
"However, October's early estimate shows the number of people on the payroll rose strongly on the month and stands well above its pre-pandemic level."
Meanwhile, the unemployment rate fell to 4.3% in the three months to September from 4.5% in August, coming in slightly below consensus expectations of 4.4%.
The number of job vacancies in August to October continued to rise to a new record of 1.172m, up by 388,000 from the pre-pandemic January to March 2020 level.
Paul Dales, chief UK economist at Capital Economics, said: "This labour market release is the first of two before the Bank of England's December policy meeting and it suggests that the labour market remained tight after the furlough scheme ended. If the story is similar in the next release on 14th December, then we think the Bank will raise interest rates on 16th December."
Victoria Scholar, head of Investment at Interactive Investor, said: "We are seeing the number of employees on companies' books at a record high, despite the end of the furlough scheme while job vacancies are also at all-time highs. On the plus side, there are plenty of job opportunities, which are set to rise in the run up to festive season, very low redundancy levels and the headline unemployment figure on a downward trajectory.
"However, the downside is that there are not enough workers, with fewer overseas jobseekers after the pandemic, skills shortages and supply struggling to keep up with demand amid a faster-than-expected post-Covid recovery. The tighter labour market continues to support an unsettling inflationary environment.
"By holding off from raising rates this month, it was clear the Bank of England wanted to see more data before jumping the gun with today's employment figures helping to paint a clearer picture. Wages saw the smallest gain in five months but were still above expectations, pointing to ongoing price pressures. The central bank governor Andrew Bailey sounded his concerns just yesterday about the tightness of the labour market, which today's data largely appears to confirm, increasing the chances of a rate hike sooner rather than later."
Sterling was boosted by the jobs data and by 0900 GMT was trading up 0.4% against the dollar and the euro at 1.3468 and 1.1843, respectively.
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