Britain’s job market withstood the end of the government’s furlough scheme last month, easing lingering concerns the Bank of England would raise interest rates from their pandemic low.
The pound strengthened as the number of staff on business payrolls in October registered an increase of 160,000 (0.8%), compared to levels in February 2020, before the coronavirus pandemic hit.
“Now that today’s labour market data shows that hurdle has been cleared, we think the Bank of England has the green light for interest rate lift-off at their December meeting,” Ambrose Crofton, a global market strategist at J.P. Morgan Asset Management, said. The Bank of England’s (BoE) next monetary policy announcement is scheduled for December 16.
“Today’s release has given the Bank an amber light and the next labour market release will probably give it the green light to raise interest rates from 0.1% to 0.25%,” said Paul Dales, the chief UK economist at the consultancy Capital Economics.
The Office for National Statistics said it was possible that people made redundant at the end of the furlough scheme would continue to appear as in work in the data for a few further months, while they worked out their notice period.
“However, responses to our business survey suggest that the numbers made redundant were likely to be a small share of those still on furlough at the end of September 2021,” the ONS said.
On Tuesday November 16, data showed job vacancies hit an all-time high of 1.172 million in the three months to October, almost 400,000 more than before the pandemic.
The Resolution Foundation, a think tank, said it was taking on average one-and-a-half months for an employer to fill a vacancy, matching the time it took before the pandemic.
“This shows that record vacancies are being driven by the economy reopening, rather than it being impossible to hire staff as some have suggested,” it said. Employers in some sectors such as food processing and road haulage say post-Brexit restrictions on workers from the European Union are making it harder for them to fill positions.