UK Unemployment Rate hits 5% for the first time since 2016

The UK unemployment rate increased to 5.0% in November as further measures to contain Covid had an impact on the labour market.

The unemployment rate had not been above 5% since early 2016 and today’s official figures may even appear rosier than the unofficial state of the labour market. With millions of employees currently furloughed using the government’s job retention scheme, the unemployment rate is likely higher. Earlier this month the Bank of England Governor Andrew Bailey estimated it was nearer 6.5%.

A similar picture is happening with earnings, which on the face of it looked strong, increasing 3.6% annually in the September to November period. However, this is being impacted upwards by a decrease in the number and proportion of lower-paid jobs compared with pre-pandemic. “It is estimated that underlying wage growth — if the effect of this change in profile of jobs is removed — is likely to be under 2%,” the UK’s Office for National Statistics said.

The pound was initially subdued on the data but GBP/USD has since retreated to a low of 1.6310, the lowest level in a week. EUR/GBP trades at its highest level since Friday.

Regional differences
There were approximate 800,000 fewer employees on the payroll in the UK in December compared to February last year. ONS Head of Economic Statistics Sam Beckett said, “parts of London have seen the steepest percentage falls, followed by North Eastern Scotland.”

Redundancies
One interesting point from the latest release was the latest redundancy estimates. This measures the number of people who were made redundant or took voluntary redundancy in the three months before the Labour Force Survey Interviews. The ONS said the redundancy rate increased by a record 10.0 per thousand on the year to a record 14.2 per thousand. Of those people, the rate was highest for those in the 25-34 age bracket, rising to 16.2 per thousand, compared with 3.1 per thousand a year earlier.