United Kingdom: The labor market strengthens midway through Q2
According to the ONS, in February–April the unemployment rate dipped to 4.7% from 4.8% in the previous rolling quarter, with weekly estimates showing the rate fell markedly to a little over 4.0% towards the end of April. Experimental data for May showed that employment rose by close to 200,000 from April, with the accommodation and food services sector showing particularly sharp gains. Moreover, job vacancies surpassed pre-pandemic levels, as the economy benefitted from the marked lockdown easing.
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.
James Smith, economist at ING, painted a nuanced outlook:
“The remaining months of 2021 are likely to be turbulent for the UK jobs market. Unemployment is set to rise come the end of the furlough scheme in September, though […] the spike will be considerably less pronounced than it might have been had support ended earlier. […] The better news is that the hardest-hit sectors appear to be in the early stages of recovery. […] This is one of the reasons why we think the overall UK jobs market will be quicker to return to pre-virus levels of employment than after past recessions/crisis, and indeed unemployment may be falling again by the turn of the year.”