UK unemployment rate drops to 4.5% as vacancies and payrolls hit record – business live

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Unemployment across the UK has dipped, as company payrolls continued to swell over the summer as the economy recovered from the economic shock of the pandemic.

Figures released by the Office for National Statistics this morning show that the jobless rate fell to 4.5% in the three months to August. That’s down from 4.6% in the three months to July, and 0.4 percentage points lower than the previous quarter.

In another sign that the labour market continuing to recover, the number of payroll employees rose by 207,000 in September to a record 29.2m, back at pre-pandemic levels.

Pawel Adrjan

New @ONS data:
– Payrolls +207k in September
– Record vacancies
– Headline employment/unemployment/inactivity figures all improved on previous quarter

October 12, 2021

Firms are also struggling to fill jobs, the survey confirms. Job vacancies in July to September 2021 hit a record high of 1,102,000 – an increase of 318,000 from its pre-pandemic January to March 2020 level.

Office for National Statistics (ONS)

Headline indicators for the UK labour market for June to August 2021 show

▪️ employment was 75.3%
▪️ unemployment was 4.5%
▪️ economic inactivity was 21.1%


October 12, 2021

But the surge in pay growth seen earlier this year (and hailed by Boris Johnson) has slowed.

Total pay, including bonuses, rose by 7.2% in the June-August quarter, down from 8.3% in May-July. Regular pay rose by 6.0% in the quarter, down from 6.8%

And adjusted for inflation, that leaves real total pay at 4.7% and real regular pay at 3.4%.

UK average earnings

Photograph: ONS

But, the ONS points out that this data should be treated cautiously, as the loss of more low-paid jobs in the pandemic has pushed up average earnings.

They explain:

Annual growth in average employee pay is being affected by temporary factors that have inflated the increase in the headline growth rate: base effects where the latest months are now compared with low base periods when earnings were first affected by the pandemic, and compositional effects where there has been a fall in the number and proportion of lower-paid employee jobs, therefore increasing average earnings.

Duncan Weldon
(@DuncanWeldon) The real time PAYE data has the number of employees above pre-pandemic levels.
Median pay growth slowing from late Spring/Summer highs as base effect drops out but still above pre-pandemic rates.

October 12, 2021

Overall, the ONS estimates that underlying regular earnings growth rate is between 4.1% and 5.6% — but again, given the uncertainty around this range, interpretation should be treated with caution.

ONS Director of Economic Statistics Darren Morgan says the jobs market continues to recover:

Office for National Statistics (ONS)

Commenting on today’s labour market data, ONS Director of Economic Statistics Darren Morgan said: (1/3)

October 12, 2021

Office for National Statistics (ONS)

Continuing, Darren Morgan said: (2/3)

October 12, 2021

Office for National Statistics (ONS)

Darren Morgan added: (3/3)

October 12, 2021

More details and reaction to follow…

Stock markets are expected to open lower, as fears about weakening growth, the global energy crunch, higher prices and the possibility of interest rate hikes keep investors on edge.


European Opening Calls:#FTSE 7096 -0.71%#DAX 15093 -0.70%#CAC 6522 -0.74%#AEX 768 -0.79%#MIB 25758 -0.66%#IBEX 8828 -0.80%#OMX 2217 -0.72%#STOXX 4041 -0.76%#IGOpeningCall

October 12, 2021

Yesterday, the odds of a UK interest rate rise before the end of 2021 increased, as rising fuel and food prices push up inflation.

And the International Monetary Fund is holding its annual meetings in Washington, where its expected to issue a downbeat economic outlook, as supply-chain bottlenecks and rising inflationary pressures threaten the recovery.

The agenda

  • 7am: UK labour force survey
  • 10am BST: ZEW survey of German investor confidence
  • 11am BST: NFIB index of US Small Business Optimism
  • 2pm: IMF publishes its World Economic Outlook
  • 3pm BST: JOLTS survey of US job vacancies
  • 3.30pm BST: IMF publishes its Global Financial Stability Report


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