The ONS’ latest official statistics continue to show a relatively positive picture of the U.K.’s labor market health, relative to other indicators. The latest report shows that employment in the three months to April was reported to have risen by 6000 – against expectations of a decline, while jobless rate unexpectedly remained unchanged at 3.9 percent. Consensus expectations were for the unemployment rate to rise to 4.7 percent.
On the face of it, these statistics provide little indication of the coronavirus-related malaise that has been seen in other indicators of domestic economic activity and point to the labor market being in better shape than other metrics suggest, said Lloyds Bank in a research report.
“However, it is likely that the headline figures are overstating the health of the UK labour market, particularly with more-timely trends elsewhere in the report painting a more sombre picture, likely to be more evident in the coming months’ reports”, stated Lloyds Bank.
Firstly, the number of unemployed people claiming benefit rose sharply by 528,900 in May, taking the total number to 2.8 million. While these figures also include those claimants that are not actively seeking work, and therefore are slightly overstating the rise in the number of actual jobseekers, it still points to rises in unemployment in the months ahead.
Secondly, the number of vacancies dropped by more than 40 percent to 476k in the three months to May, in line with signs of ebbing demand for labor as large parts of the economy were effectively shutdown last month.
Data on the total number of weekly hours worked throughout the economy indicated a fall of 8.7 percent in the quarter to April.
“All in all, this suggests that the true health of the UK labour market is overstated by the headlines from today’s release, with other more-timely indicators pointing to a much sharper deterioration than the official numbers are suggesting”, added Lloyds Bank.
