UK labour market recovery continues despite initial Omicron panic

Paul Craig, portfolio manager at Quilter Investors, comments on today’s UK labour market statistics.

“The UK labour market has continued to recover well, and the Omicron variant appears to have had less of an impact than had first been feared.

“This morning’s ONS data shows the unemployment rate dropped by 0.2 percentage points on the quarter to 4.1%. The employment rate also fared well, increasing by a further 0.1 percentage points on the quarter to 75.5%. Though it is worth noting that economic inactivity increased slightly, up 0.1 percentage points to 21.2%.

“Despite Omicron fears, the so far positive recovery has continued to play out, with payrolled employees up 108,000 in January to reach a record high of 29.5 million. This could be partially as a result of low numbers of self-employed workers, which is yet to fully recover following decreases seen during the pandemic.

“Job vacancies once again hit a new record high of 1,298,400, an increase of 513,700 on pre-Covid January to March 2020 levels. However, the rate of growth in vacancies has further slowed and will likely continue to.

“With the Omicron panic largely behind us, we would likely have seen any major impact unfold in this morning’s data set. Thankfully the impact has been less severe than many had feared, an increase in unemployment has been avoided and the labour market continues to experience a strong recovery.

“With the government’s return to ‘Plan A’ and additional lifting of restrictions still to come, the labour market should continue on this trend.”

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