UK unemployment rate unexpectedly falls to 5% in January as the country looks ahead to reopening

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The UK is looking ahead to reopening thanks to a rapid vaccine rollout

  • The jobless rate dropped to 5% in the three months to January, from 5.1% in the three months to December.
  • Separate figures showed the number of people on payrolls picked up for the third month in a row.
  • The UK has suffered badly during COVID-19 but is looking to reopen thanks to a quick vaccine rollout.
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The UK unemployment rate fell unexpectedly to 5% in the three months to January, data showed on Tuesday, in an encouraging sign given the country’s plans to gradually lift its coronavirus restrictions.

Britain’s headline unemployment rate fell to 5% from 5.1% in the three months to December, the Office for National Statistics said, beating economists’ expectations of an increase to 5.2%.

Separate figures showed 68,000 more people joined payrolls in February than in January, the third monthly increase, although 693,000 fewer people were on payrolls compared to a year earlier.

“After yet another monthly increase, there were almost 200,000 more employees on payroll in February than three months earlier,” Sam Beckett, head of economic statistics at the ONS, said.

Beckett said that of the almost 700,000 people who have fallen off payrolls, almost two-thirds have been under 25, over half worked in the hospitality sector, and almost a third have been in London.

The UK has suffered over 130,000 deaths from coronavirus and one of the worst economic tolls in the world.

But its unemployment rate has been held down by the furlough wage subsidy scheme. And the country has rapidly rolled out COVID-19 vaccines, allowing it to plot its way out of restrictions by the summer.

Non-essential stores may reopen as soon as April 12 if the government feels cases are under control, with hospitality venues such as pubs potentially allowed to resume business and serve people outside. All restrictions may then be lifted as early as June 21.

“The continued success of the vaccine rollout provides us with hope for the future, and through our plan for jobs, we will continue to support people throughout the months to come,” UK chancellor Rishi Sunak said.

UK markets showed little reaction to the data. London’s FTSE 100 index was down 0.43% in early trading, while the pound was off by 0.4% against the dollar at $1.3806.

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UK unemployment rate hits 4-year high in final quarter of 2020 but data shows ‘tentative’ signs of stabilizing

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The UK economy suffered the worst slump in the G7 in 2020

  • The UK unemployment rate rose to 5.1% in the fourth quarter of 2020, the highest since 2016.
  • Yet company payrolls rose in January, when the UK went into national lockdown, suggesting the jobs markets may be stabilizing.
  • The UK suffered the worst slump out of the G7 in 2020 and has seen more than 120,000 deaths.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The UK unemployment rate hit 5.1% in the final quarter of 2020, its highest since 2016, as tough coronavirus restrictions caused companies to lay off workers, according to official data on Tuesday.

Yet the UK’s Office for National Statistics said there were some “tentative” signs of stabilizing, with separate data showing the number of employees on company payrolls rose by 83,000 in January from December.

The coronavirus pandemic has been particularly painful for the UK, which has suffered more than 120,000 deaths and the worst economic slump in the G7.

However, the UK has been one of the fastest at rolling out coronavirus vaccines. This allowed Prime Minister Boris Johnson to lay out a “roadmap” on Monday that could see the whole of the economy reopened by the summer.

The 5.1% unemployment rate in the final quarter of 2020 was up from 4.7% in the previous quarter and 3.8% a year earlier, the ONS said. It was the highest figure since early 2016.

It meant an estimated 1.74 million people were out of work in the period. That was 454,000 higher than a year earlier.

Yet ONS deputy national statistician Jonathan Athow said that the separate payroll figures “show tentative early signs of the labour market stabilizing, with a small increase in the numbers of employees paid through payroll over the last couple of months.”

Though he added that there are “still over 700,000 fewer people employed before the start of the coronavirus pandemic.”

The UK government’s job support scheme – known as furlough – has kept a lid on unemployment by paying the wages of workers who may otherwise have been laid off. It supported more than 9 million workers at its peak in 2020.

The Bank of England predicted earlier in February that unemployment would rise to close to 8% by the middle of 2021 after the scheme closes. However, chancellor Rishi Sunak is reportedly planning to extend the program in his March 3 Budget, which lays out the Treasury’s economic policies.

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