UK jobless rate falls slightly to 4.8 pct in Q1 amid lock-down

The unemployment rate in Britain fell slightly to 4.8 percent in the first quarter (Q1) amid the nationwide COVID-19 lock-down, the British Office for National Statistics (ONS) said Wednesday.

The level of 4.8 percent in Q1 was 0.8 percentage points higher than the pre-pandemic period from December 2019 to February 2020, but 0.3 percentage points lower than the previous quarter, said the ONS.

Meanwhile, the employment rate across Britain was estimated at 75.2 percent in Q1, 1.4 percentage points lower than before the pandemic (December 2019 to February 2020) but 0.2 percentage points higher than the previous quarter, increasing for the first time since December 2019 to February 2020, the data revealed.

“The decline in the unemployment rate and the rise in payroll employment is further confirmation that the UK jobs market is now more resilient to the ongoing restrictions,” said Suren Thiru, head of economics at the British Chambers of Commerce.

Echoing Thiru, James Smith, a developed markets economist at financial services firm ING, said the latest employment data “provides further signs that the jobs market has begun to turn a bit of a corner since the turn of the year.”

The lock-down further eased on Monday across Britain despite concerns over risks posed by corona-virus variants, as pubs, bars and restaurants in England were permitted to open indoors. Indoor entertainment was also resumed, including cinemas, museums and children’s play areas.

In Scotland, except in Glasgow and Moray due to spikes of cases, people can meet indoors in groups of six from up to three households while pubs and restaurants can serve alcohol indoors until 22:30 BST (2130 GMT).

In Wales, pubs and restaurants can reopen indoors and customers can meet in groups of up to six from six households. Northern Ireland will review lock-down rules on May 20 and could lift some restrictions on May 24.

Despite the reopening, analysts said they believe that the jobless rate is still expected to rise in months ahead as the furlough scheme ends in September as planned.

“There is little doubt that we will see a rise in the jobless rate when the furlough scheme ends in September, though the peak is likely to be significantly lower than feared a few months ago,” said Smith. Smith added that we expect the jobless rate to “peak at around 6 percent in the autumn, though we think things are likely to be improving again by year-end.”

The economic scarring caused by the corona-virus may “drive a two-track jobs market recovery” with strong demand for labour in sectors where activity rebounds quickly, but with young people now entering the workforce, those who lost their job during the pandemic may be at particular risk of longer-term unemployment, said Thiru.

Calling for more support from the government to fuel the job market, Thiru said more interventions are likely to be needed, including “extending the kickstart scheme to help protect young people from the risk of displacement from labour market”.

To bring life back to normal, countries such as Britain, China, Russia, the United States as well as the European Union have been racing against time to roll out corona-virus vaccines.