Employers added a record 241,000 staff to their payrolls last month, taking the total number to 29.1 million, above the level recorded in February 2020 just before the country went into the first Covid-19 lockdown.
Official figures published yesterday showed the scale of the continued recovery in the jobs market as the government phases out the furlough support scheme, which finishes at the end of this month.
However, the Office for National Statistics warned that the jobs recovery remained uneven, with the number of workers in hard-hit areas such as London and sectors such as hospitality well below pre-pandemic levels.
The data also showed that the unemployment rate fell to 4.6 per cent in the three months to July, down from 4.7 per cent and in line with economists’ expectations.
The number of job vacancies in June to August 2021 was 1.03 million, the ONS reported, representing the first time that vacancies have risen over one million since records began in 2001. Average weekly earnings, excluding bonuses, rose by 6.8 per cent year-on-year from May to July, but the statistics office said that this had been distorted by the pandemic and furlough and noted that the underlying rate was probably 3.6 per cent to 5.1 per cent.
July marked the peak of the so-called pingdemic, when hundreds of thousands of staff had to self-isolate after being alerted by the NHS app that they had been in contact with people who had tested positive for Covid-19.
Rishi Sunak, the chancellor, said that the statistics “show that our plan for jobs is working”, with the unemployment rate having fallen for seven months in a row and fewer potential redundancies being notified in August than at any point since the start of last year.
However, Ruth Gregory, at Capital Economics, the consultancy, said that the figures would fuel concerns that labour market conditions were becoming too tight. “The latest data brought more signs that labour market slack is declining fast and that labour shortages are contributing to faster underlying pay growth,” she said. Shortages should prove temporary, but the “danger is that they persist for longer than we expect, causing inflation to stay high and the Bank of England to pull the interest rate trigger next year”.
Gregory added that the surge in job vacancies above one million was 27.5 per cent above their pre-pandemic level and suggested that labour shortages were still intensifying. “This will put further upward pressure on wages,” she said.
Kitty Ussher, chief economist at the Institute of Directors, said that the economy was “well-prepared for the end of furlough, with unemployment demonstrating a clear downward trend and the highest level of vacancies in the economy since records began”.
Samuel Tombs, at Pantheon Macroeconomics, said that about 60 per cent of staff on furlough were attached to small businesses employing fewer than 20 people, “who are unlikely to have the financial strength to re-employ them for all their pre-Covid hours.
“While job vacancies rose to a new record high in August, vacancies are skewed towards different industries to those that have used the furlough scheme the most, pointing to a need for people to retrain before they are re-employed.
“As things stand, we expect the unemployment rate to rise to about 5 per cent in the fourth quarter, from 4.5 per cent in the third quarter, and for many furloughed staff that cling on to their jobs to receive fewer hours than they desire.”