Employers brought 356,000 people back to work between May and June, the largest single month increase in jobs since the pandemic began, as the economy bounced back with the easing of lockdown.
Payroll data showed that 650,000 jobs had been created since March, before restrictions were relaxed. The numbers remain 206,000 below pre-Covid levels, however, at 28.9 million, the Office for National Statistics (ONS) said.
Economists said the jobs market was “well on its way to recovery” after solid monthly data on employment, redundancies, vacancies and pay, raising hopes that employers will pick up the slack as the furlough scheme is withdrawn. Close to two million people remain on furlough. Starting this month employers had to pay 10 per cent of staff wages and the support will be fully removed at the end of September.
Official data showed that redundancy rates fell to 3.8 per thousand, in line with pre-pandemic levels for the first time, and job vacancies reached 862,000, 77,500 above pre-Covid levels as all but one industry saw an increase in recruitment.
Total weekly hours worked increased by 23.3 million to 981.4 million, the highest since the crisis but still 6.7 per cent below pre-pandemic levels. Average weekly earnings grew 7.3 per cent. After adjusting for furlough distortions, the ONS estimated underlying growth in pay at “between 3.2 per cent and 4.4 per cent”, meaning wages are growing in real terms after inflation.
Rishi Sunak, the chancellor, said: “We are bouncing back. The number of employees on payrolls is at its highest level since last April and the number of people on furlough halved in the three months to May.”
Ruth Gregory, UK economist at Capital Economics, said the latest data “paint a picture of a labour market well on its way to recovery”.
Yael Selfin, KPMG chief economist, said the pick up in demand for workers had been so strong that the labour market was “struggling to cope with the pace of reopening: demand for new hires appears well ahead of the number of jobseekers”. She expects unemployment to peak at 5.5 per cent after furlough is withdrawn.
The official ONS labour force survey unemployment rate for the three months to May held steady at 4.8 per cent, after the three months to April estimate was revised up. Employment increased by 25,000 on the previous quarter and unemployment decreased by 68,000. The claimant count fell by 114,800.
The gradual reopening of the economy has driven the labour market improvement. Three of the sectors that had the steepest falls in employment at the start of the crisis showed substantial monthly increases in payrolled employees. Between May and June 2021, hospitality companies took on 94,000 employees, retailers employed 29,000 and arts and entertainment hired 24,000, the ONS said. There was also a pick up in young workers, who were disproportionately affected by the pandemic.
Payroll data showed that those aged under 25 accounted for 101,000 of the 356,000 increase in June. The official survey figures showed that over the three months to May there was a stronger increase in the employment rate and a decrease in the unemployment rate among those aged between 16 and 24. Inactivity numbers suggested that many are beginning to return to employment from education.
“The labour market is continuing to recover,” Darren Morgan, ONS director of economic statistics, said. “The number of job vacancies continued to rise very strongly. The biggest sector driving this was hospitality, followed by wholesaling and retailing.”