The U.K. labor market strengthened more than expected in April as the economy began to emerge from coronavirus restrictions.
The number of people on payrolls rose 97,000, and vacancies increased 13%, the Office for National Statistics said on Tuesday. The jobless rate in first quarter fell unexpectedly to 4.8% as employment surged 84,000, the first gain since the pandemic struck.
The jobs outlook has improved significantly in recent months, with the government announcing plans to fully reopen the economy by June 21 and then extending wage support for furloughed workers until the end of September. It’s shifted the debate toward when the Bank of England will start tightening monetary policy.
The central bank now expects unemployment to peak at just 5.4% in the third quarter instead of a previously estimated 7.9%, despite the economy last year experiencing its deepest contraction in three centuries.
England this week took its biggest step yet toward returning to normal life with the reopening of indoor hospitality for the first time in five months. In April, non-essential stores welcomed back customers. In a further boost, Amazon Inc. said last week it will hire 10,000 more people in the U.K.
However, hopes for the strongest economic rebound in decades are being overshadowed by the highly transmissible Indian variant of coronavirus, which has been found in dozens of districts across the country. Prime Minister Boris Johnson has warned the final stage of lifting restrictions could be delayed by the outbreak and urged people to get vaccinated.
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Unemployment is set to peak at a far lower level than in the aftermath of previous recessions. That’s largely due to the tens of billion pounds of public money spent on keeping furloughed employees on payroll. Economists assume that only a fraction of 4.2 million people furloughed at the end of March will end up out of work.
In the hospitality sector, many firms are struggling to fill vacancies. Bars, restaurants and leisure venues relied heavily on migrants workers, many of whom left the U.K. during the pandemic. Others are reluctant to return to an industry facing an uncertain future.
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Still the crisis leaves an uneven mark on the labor market. A key challenge for the government is getting young people back to work, with unemployment among 18 to 24-year-olds running at double the national average.