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The UK jobs market is booming – what does that mean for investors?
Wednesday 5th January 2022
Unemployment in the UK is back to pre-pandemic levels, employers are desperate to hire more staff, and wages are rising.
The UK jobs market is roaring ahead
The latest UK employment figures came out from the Office for National Statistics (ONS) this morning. Not to put too fine a point on it, they were extremely strong.
In the three months to July, the unemployment rate fell to 4.6%, from 4.7% before. And during August, according to more timely data from HMRC, payrolls grew by 241,000. That puts us back to pre-pandemic levels.
The employment rate (that is, the proportion of people aged between 16 and 64 who are in work) rose to 75.2%. That’s still lower than before the pandemic and the shutdown (when it was sitting at 76.5%) but it’s higher than it was last quarter.
And the inactivity rate – that is, people who are of working age, but aren’t actively seeking work for various reasons – is sitting at 21.1%. That’s higher than pre-pandemic (when it was 20.2%) but it’s again fallen from the previous quarter.
Meanwhile, employers are desperate to hire more people. The number of job vacancies rose to 1.034 million in the three months to August. That is the first time ever that the figure has gone above one million.
In short – more and more people are returning to work; the proportion of “discouraged” workers is falling all the time; and employers are still really struggling to find people.
Add that all up, and it’s no wonder that wages are shooting up. The ONS finds that weekly earnings (including bonuses) rose by 8.3% in the quarter to July 2021, compared to last year. Excluding bonuses, the figure was 6.8%.
