4.16am EDT
04:16
Record vacancies as demand rises and staff availabilility
3.50am EDT
03:50
UK employment: what the experts say
3.30am EDT
03:30
Record vacancies is risk to recovery
3.25am EDT
03:25
Capital Economics: labour market slack falling fast
2.51am EDT
02:51
ONS: employment rate continues to recover, but recovery is uneven
2.34am EDT
02:34
Introduction: UK payrolls return to pre-pandemic levels
4.16am EDT
04:16
Record vacancies as demand rises and staff availabilility
Every sector of the UK economy has posted more job vacancies over the last quarter, with transport companies, and bars, restaurants and hotels, among the areas struggling the most.
The record total of vacancies (over 1 million) meant there were 3.4 vacancies for every 100 employee jobs, also a record high.
The ONS says:
The fastest rate of growth was seen in other service activities, which grew by 93.3% (12,500), followed by transport and storage at 76.3% (20,300) and accommodation and food service activities at 75.4% (57,600).
In the latter two categories labour demand has increased rapidly while staff availability fell because of a mix of employees leaving these sectors to find employment elsewhere and a reluctance of workers to return to their previous roles.
The accommodation and food service activities industry has the highest ratio of vacancies — with 5.9 positions unfilled out of ever 100 employee jobs.
4.08am EDT
04:08
Today’s jobs figures are a ‘milestone’ in the recovery, says Learning and Work Institute’s chief executive, Stephen Evans.
But he also points out that total employment, on the Labour Force Survey, is still below its pre-pandemic levels — and that long-term unemployment (those out of work for at least a year) is rising.
Evans says:
“We’ve reached a milestone moment, with payroll employment back at pre-pandemic levels and more than one million vacancies. This is undoubtedly positive but scratch below the surface and you see months if not years of recovery still ahead. Employment is still more than 700,000 down on the wider survey measure and long-term unemployment is up 45%.
With more than a million people still furloughed ahead of the scheme’s closure at the end of this month, we need to ramp up support for people to find work. This is particularly true of both young people, who were more likely to lose their jobs during the pandemic, and older people, who are now more likely to still be furloughed.”
3.50am EDT
03:50
UK employment: what the experts say
Several experts are warning that ending the furlough scheme on 30th September will hurt the jobs recovery, after the jump in payrolls and vacancies over the summer.
Paul Craig, portfolio manager at Quilter Investors, fears that some furloughed staff will not return to their jobs:
“Job creation continues apace in the UK, but for how long this can be sustained is unclear just now. The end of this month sees the withdrawal of the furlough scheme, and with 1.6m people still having their wages subsidised in one shape or another, it is unfortunately unlikely all of these people will be kept on into full-time employment.
Craig also warns that lifting national insurance rates (the health and social care levy) could also deter firms from hiring:
“Despite the success of the furlough scheme and the mass unemployment that many had feared being prevented, the jobs market remains very much in recovery and below pre-pandemic levels. As has been widely reported the UK has somewhat of a skills shortage, with many industries reporting hiring difficulties and lack of available labour.
With Covid following close on the heels of Brexit there is uncertainty to whether the UK will be able to match those seeking work with the jobs that are available. The new national insurance levy also adds an additional cost to employers, and as such we remain unsure whether this could also cause businesses to review or temper future hiring needs.
Yael Selfin, chief economist at KPMG UK, says the labour market held steady despite the impact of the ‘pingdemic’, but fears there is “more pain to come.”
While the pressure should ease as more people look to return to work and the furlough scheme ends, the UK labour market is set to remain choppy with vacancies taking time to fill due to skills shortages and reduced availability of overseas workers.
“Despite the mid-summer surge in infections and strict self-isolation rules, the employment rate rose strongly in the three months to July as activity was gradually returning back to normal.
“Pay growth continued its strong run, although the rate eased compared to June. Furlough effects which depressed pay last summer now contribute to higher pay growth, potentially boosting it by 2-3%. Pay may rise further in the coming months, supported by the recovery in the labour market.”
Ben Harrison, Director of the Work Foundation thinktank, says the government should maintain furlough support for some industries:
“This month’s statistics show positive signs of recovery in the labour market, with the number of payroll employees increasing over August by 241,000 to pre-pandemic (February 2020) levels. With unemployment continuing to decrease slowly, this shows people coming out of furlough are largely going back to their jobs.
“However, this is no time to be complacent. At the end of July, there were still 820,000 fully furloughed jobs. Sectors such as the arts and accommodation remain more reliant on the furlough scheme, as do smaller businesses generally, and younger workers.
“With the potential for public health restrictions to return as we head into winter, the Government should step back from axing furlough in its entirety, and instead target the support at those sectors which remain most affected by the pandemic, with a larger employer contribution to ensure the roles supported are truly viable for the future.
“Alongside this, given the risk they may soon need to find a new job, those workers currently on furlough should be able to access employment support, such as advice and information, that is usually restricted to those who have made a claim or are receiving Universal Credit or other means tested benefits.”
3.30am EDT
03:30
Record vacancies is risk to recovery
Britain’s record job vacancies threatens to slow the recovery this autumn, if firms can’t find the workers they need.
Neil Carberry, chief executive of the Recruitment & Employment Confederation (REC), says the government should allow some flexibility in the immigration system, to help fill jobs:
“The recovery in the number of pay-rolled employees to pre-pandemic levels underlines the huge amount of hiring that is going on right now. With the ONS vacancy count now over 1 million for the first time ever, and most individual sectors having record numbers of unfilled jobs, there is a real risk of shortages impacting the recovery through the autumn.
“There are a number of things we can do to solve this crisis. Government has convened a cross-department forum to tackle these shortages, but this will only be effective if industry experts are involved as well. Government must work with business to improve training opportunities for workers to transition into the most crucial sectors, and allow some flexibility in the immigration system at this time of need.
And while businesses are raising salaries in many sectors, they must think more broadly about how they will attract and retain staff through improved conditions, facilities and staff engagement, working with recruiters, who are the professional experts in all of this.”
Several business leaders have called for EU lorry drivers to be given temporary visas to help address shortages – but the government has asked them to invest in UK workers instead.
3.25am EDT
03:25
Capital Economics: labour market slack falling fast
Today’s jobs report shows that labour market slack is declining fast, with labour shortages are contributing to faster underlying pay growth, says Ruth Gregory of Capital Economics:
Although fading compositional and base effects meant that the headline growth rate of average earnings fell from 8.8% in June to 8.3% in July, July’s figure was a touch stronger than expected (consensus forecast 8.2%). What’s more, underlying pay growth is estimated to have risen from a range of 3.5-4.9% in June to 3.6-5.1% in July.
The surge in job vacancies suggests that labour shortages are still intensifying, putting more upward pressure on wages, she adds.
Encouragingly, though, employment on the Labour Force survey rose by 183,000 in the three months to July, more than the consensus.
Gregory explains:
That was the largest rise in employment since January 2020 and an impressive result given that firms started to pay 10% of the wages of their furloughed workers.
The 86,000 fall in ILO unemployment pushed the unemployment rate down a notch from 4.7% in June to 4.6% in July. Meanwhile, the figures for August suggest more good news is around the corner, with PAYE employment in August rising by 241,000 m/m.
3.06am EDT
03:06
Minister for Employment Mims Davies MP has welcomed the jump in payrolls:
“As we continue to push ahead with our recovery, it’s great to see another significant fall in unemployment and the number of people on payrolls rising by 241,000 in August – the biggest monthly increase on record – showing our Plan for Jobs is working.
“We’re helping employers recruit for the record number of vacancies out there, particularly in growing sectors, and supporting people of all ages and backgrounds to overcome barriers, land their next role, and progress in work.”
3.04am EDT
03:04
Officially, UK pay growth remained strong in the last quarter — but the full picture is more nuanced.
Average total pay (including bonuses) surged by 8.3% per year in the May-July quarter, down from 8.8% a month ago.
Basic pay rose less steeply, by 6.8%, down from 7.3% — but that’s still strong by usual standards.
However, the ONS points out that these figures are affected by several temporary factors; pay levels fell early in the pandemic [creating a low base effect], and more low-paid jobs have been lost, lifting average earnings [the compositional effect].
Staff shortages in some industries have also pushed pay levels up, with scarce workers such as lorry drivers seeing wage rises and bonuses.
Thomas Pugh, economist at RSM UK, says:
‘The fall in the unemployment rate from 4.7 per cent in June to 4.6 per cent in July was driven by a 183,000 rise in the number of people in employment. August also looked good with the number of payroll employees rising by 241,000 to 29.1m, the same level as in February 2020 before the pandemic.
That said, vacancies rose above 1m for the first time ever, so labour shortages are likely to persist for the rest of the year and into 2022 in some sectors.
‘At the same time headline pay growth fell from 8.8 per cent 3myy in June to 8.3 per cent in July. Pay growth is still being heavily distorted by the pandemic, but we think that underlying pay growth is probably around 2.5 per cent, similar to its pre-pandemic level.
2.51am EDT
02:51
ONS: employment rate continues to recover, but recovery is uneven
Jonathan Athow, the UK’s deputy national statistician, points out that the recovery is uneven….. and that younger workers were badly hurt by the job losses early in the pandemic:
(@ONS)
Commenting on today’s labour market data, ONS Deputy National Statistician @jathers_ONS said:
(@ONS)
Continuing, @jathers_ONS said:
(@ONS)
.@jathers_ONS concluded:
2.45am EDT
02:45
(@ONS)
There were an estimated 1.03 million job vacancies in June to August 2021, up from 764,000 in the previous three months.
Early figures for August show there were more than 1.1 million vacancies that month for the first time ever https://t.co/jdYToe6z7O pic.twitter.com/lrVhDzRhZY
2.34am EDT
02:34
Introduction: UK payrolls return to pre-pandemic levels
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
UK company payrolls have returned to their pre-pandemic levels, and vacancies are at a record, as the long recovery from the Covid-19 crisis continues.
The latest unemployment report, just released, shows that “the labour market continuing to recover”, according to the Office for National Statistics.
The number of payroll employees rose by 241,000 in August to 29.1 million, returning to levels seen in February 2020 before the first lockdown.
All regions except London, Scotland and South East are now above pre-pandemic levels, the ONS reports.
And despite this rise in payrolls, vacancies are at a record levels as firms across the economy struggle to fill positions, particularly in the hospitality sector, and transport and storage.
The number of job vacancies in June to August 2021 was 1,034,000 — having broken over 1 million for the first time since record began this summer — and is now 249,000 above its pre-pandemic levels of January to March 2020.
The ONS explains:
Vacancies grew on the quarter in June to August 2021 by 269,300 (35.2%), with all industry sectors increasing their number of vacancies and the majority reaching record levels; the largest increase was seen in accommodation and food service activities, which rose by 57,600 (75.4%).
These data comes just a couple of weeks before the UK’s furlough jobs protection scheme is due to end – with unions and industry lobby groups warning of a spike in redundancies as employers, many of them struggling to cope with the impact of the Delta variant, prepare to take back staff.
The ONS also reports that the unemployment rate was 4.6% in the three months to July, 0.3 percentage points lower than the previous quarter.
The employment rate has risen by 0.5 percentage points over the last quarter, to 75.2%.
(@ONS)
Headline indicators for the UK labour market for May-July 2021 show
? employment was 75.2%
? unemployment was 4.6%
? economic inactivity was 21.1%https://t.co/CUvpA1Q0PX pic.twitter.com/pW78r1ax9X
More details and reaction to follow….
Also coming up today
Investors are bracing for the latest US inflation report, which will show whether consumer prices are still rising at the fastest pace in 13 years.
This afternoon’s US CPI numbers could make for uncomfortable reading for US policymakers next week, especially if it follows the upward trend of US factory gate prices for August, says Michael Hewson of CMC Markets.
In July there was some relief that US CPI remained steady at 5.4%, raising the possibility that we may have seen a peak. More encouragingly, core CPI slipped back from 4.5% in June to 4.3% in July, however even if central bankers seem sanguine about rising prices, US consumers definitely aren’t if the New York Fed’s latest survey of inflation expectations are anything to go by. Consumer expectations for inflation over the next three years are at a heady 4%, while for one year they are 5.2%.
The biggest worry aside from the surges we are seeing in energy prices, which is worrying enough, has been the continued rise in PPI last week to 8.3%, from 7.8%, which suggests that we may have only seen a pause in the upward trajectory in prices.
We also get the latest assessment of the oil market from the IEA.
And chancellor Rishi Sunak is hosting some of the UK’s biggest tech firms at an inaugural conference, called Treasury Connect, in East London.
European stock markets are expected to open higher:
(@IGSquawk)
European Opening Calls:#FTSE 7076 +0.10%#DAX 15749 +0.30%#CAC 6693 +0.24%#AEX 793 +0.21%#MIB 26011 +0.33%#IBEX 8845 +0.33%#OMX 2341 +0.22%#STOXX 4201 +0.27%#IGOpeningCall
The agenda
7am BST: UK unemployment report
9am BST: IEA monthly oil market report
1.30pm BST: US consumer price inflation for August
Updated
at 2.48am EDT