According to new data published by the Office for National Statistics (ONS), the UK unemployment rate unexpectedly declined 0.1% to 4.8 percent between January and March.
The surprise decline, dominating today’s UK financial news, came during a period where nearly all of the UK was in a national lockdown and the figures indicate that the UK’s labour market has not suffered the severe hit many had feared. Analysts had forecast the UK unemployment rate to stay at 4.9 per cent during the first three months of the year.
The number of people in employment rose by 84,000 in the first quarter of the year. This was the first increase since the coronavirus crisis started. It was also a larger increase than the market expectations for an increase of 50,000. Those categorized as unemployed declined by 121,000.
Part of the decline in the unemployment rate – the third succession – was attributed to an increase in the number of people not seeking employment. The inactivity rate amongst men hit a record high, in a similar pattern witnessed during the first lockdown in the UK last year.
Yael Selfin, chief economist at KPMG UK, said:
“As the economy prepares to re-open fully and economic activity picks up, businesses have increased their hiring to meet the rise in demand.”
“The expected pickup in unemployment is likely to come as a delayed response to employees exiting the Job Retention Scheme, with the HMRC data suggesting that furlough peaked in January this year.
“The accelerated pace of hiring in April was underscored by data from the latest KPMG-REC survey of recruitment and employment consultancies that showed permanent work placements rising at the fastest rate for 23 years.”
