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UK Jobless Rate Drops; Job Vacancies At New Record High

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The UK unemployment rate dropped in the three months to October even after the government's furlough scheme ended in September, and job vacancies increased to a new record high, the official data showed on Tuesday.

The unemployment rate dropped to 4.2 percent during August to October, the Office for National Statistics said. The rate came in line with economists' expectations and down from 4.3 percent in three months to September.

At the same time, the employment rate increased by 0.2 percentage points on the quarter, to 75.5 percent.

In three months to October, average pay including bonuses grew 4.9 percent from the previous year, bigger than the economists' forecast of 4.6 percent.

Likewise, excluding bonuses, regular pay was up 4.3 percent, which was larger than the expected rate of 4 percent.

The ONS said previous months' strong earnings growth rates were affected upwards by base and compositional effects. Nonetheless, a small amount of base effect for certain sectors may still be present.

In November, payroll employment increased 257,000 from October to 29.4 million.

Data showed that the number of job vacancies continued to rise to a new record of 1,219,000 in September to November period.

In November, the Bank of England signaled a rate hike this month if the labor market stays tight.

Paul Dales, an economist at Capital Economics, said although the labor market remains fairly strong even after the furlough scheme ended on September 30, the BoE is likely to wait for more news on Omicron before raising rates.

The strength of the labor market, however, probably means that it is a case of rate hikes being delayed beyond December rather than being COVID-cancelled, the economist added.

The interest rates may start rising from February 2022, but only if concerns over the new variant of Covid-19 have faded, BCC Head of Economics, Suren?Thiru, said.

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