United Kingdom: Signs for labor market are positive heading into Q2
According to the ONS, in January–March the unemployment rate dipped to 4.8% from 4.9% in the previous rolling quarter, with weekly estimates showing the rate fell markedly in the month of March. Experimental data for April showed that employment rose by close to 100,000 from March, while job vacancies also increased strongly in the month, as the lockdown easing spurred hiring by firms. Taken together, the data highlights that the labor market strengthened early in the second quarter.
The unemployment rate is still forecast to increase somewhat later this year as government labor market support is wound down, although the extension of the furlough scheme until end-September should delay the rise in unemployment and also limit the extent of the rise.
According to James Smith, economist at ING:
“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. Barring a return to tighter Covid-19 restrictions, the fact that the job support is being offered until well after the April/May reopening phases should give firms enough time to rebuild their finances to be able to return most, if not all, of their staff from furlough. Where jobs are lost, it’s likely to be largely where roles no longer exist, for example because of structural change created by the pandemic. […] We expect the jobless rate to peak at around 6% in the autumn, though we think things are likely to be improving again by year-end.”