Booming UK jobs market shrugs off Brexit worries

hile uncertainty surrounding Britain’s exit from the European Union continues, the UK employment rate has soared to a new record high and unemployment fell to a fresh 44-year low as the labour market shrugged off Brexit concerns. Employment surged by 222,000 in the three months to the beginning of February, almost double the expected growth.
This was the fastest pace of jobs growth since 2015, flying in the face of fears that political uncertainty was starting to bite. There are now more than 32.7 million people in work, a record high.
The booming labour market showed no signs of flagging at the start of this year as companies hired workers at the fastest pace for three years, defying predictions of a slowdown.
Compared with the same period last year, an extra 473,000 people are in work, according to the Office for National Statistics (ONS). Full-time employment accounted for 90 per cent of the increase. The jobs market “looks astonishingly strong for an economy that is supposedly slowing on most other measures”, said economist James Knightley at ING. “Taking it all together it suggests the UK economy is in better shape than many had been believing.” Unemployment fell to 3.9 per cent, its lowest since November 1974 to January 1975.
Institute of Directors economist Tej Parikh said the labour market had the “wind in its sails” but warned of difficulties ahead. He said: “Businesses have been steadfast in bringing on board new staff and in creating vacancies, despite question marks over the future part of the economy.
Meanwhile as unemployment has fallen, competition for workers has pushed up salaries and buoyed households.” Parikh added: “But with uncertainty around Brexit reaching a crescendo, firms are becoming more and more cagey over their hiring decisions.”
The government welcomed the figures and Employment Minister Alok Sharma urged MPs to back Prime Minister Theresa May’s beleaguered Brexit deal to provide businesses with clarity going forward. He said: “Our jobs market remains resilient as we see more people than ever before benefiting from earning a wage.” Sharma said: “By backing the government’s Brexit deal and giving certainty to business, MPs have the chance to safeguard this jobs track record.”
The annual employment rise was driven by a 424,000 increase in full-time workers. Employment among women hit 71.8 per cent — the highest since records began in 1971. The UK’s economic inactivity rate stood at 20.7 per cent, the lowest level ever recorded.
Senior statistician at ONS, Matt Hughes, said: “The employment rate has reached a new record high while the proportion of people who are neither working nor looking for a job — the so-called ‘economic inactivity rate’ — is at a new record low.”
Wages are rising strongly as employers have to pay more to attract new staff and keep those they already have. Average earnings to the three months to January this year climbed by 3.4 per cent over the year, outstripping price rises of 1.8 per cent in the same period. Companies are still keen to take on more workers.
The ONS found 854,000 vacancies available, slipping a touch from its record high in the three months to January — according to the latest figures — but still the second highest level ever seen.
The biggest rise in jobs came in transport and storage, which added 58,000 positions in the final quarter of 2018. Professional, scientific and technical jobs accounted for another 48,000 while an extra 37,000 people were employed in construction. The manufacturing head count fell 12,000.
Job growth has been the bright spot of the UK economy recently as companies have continued hiring workers even as they have cut back on investment. Wages begun growing more quickly than prices, after years of stagnation.
Unexpected rise in employment will be welcomed by economists after data from surveys, such as the purchasing managers’ indices produced by IHS Markit, had suggested companies were no longer hiring at the same pace ahead of Brexit.
Director of the Jobs Economist, a consultancy, John Philpott has said: “Nobody seems to have told the labour market about the mood of Brexit-related economic uncertainty which has gripped the UK since last autumn.” Adding: “These record-breaking jobs numbers seem extraordinary and suggest that only a recession-inducing hard Brexit is likely to have a noticeably negative impact on the UK’s employment situation.”
(The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)