Employment surged to record high in January

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UK employment surged to another record high in the three months to January, but unemployment also rose as fewer people became economically inactive.

Wage growth also accelerated during the period and vacancies increased, on the back of increased political certainty following the December general election.

The number of people in work increased by 183,000 to 32.99 million in the quarter, the Office for National Statistics (ONS) said.

Analysts had forecast that employment would increase by 143,000 in January.

Manufacturing stock
Analysts predicted that wage growth would improve in the most recent quarter (Rui Vieira/PA)

However, it said the increase was also partly offset by the largest decrease of people in part-time work for more than eight years.

Meanwhile, unemployment also increased for the quarter, rising by 5,000 to 1.34 million, nudging the rate of unemployment marginally higher to 3.9%.

It said this was the first annual increase in unemployment since July 2012 and was caused by a 20,000 increase in the number of men who were unemployed.

David Freeman, ONS head of labour market statistics, said: “Today’s figures show continuing record employment but also a slight rise in unemployment on the year – for the first time since early summer 2012.

“This is because we also see a record low rate for people neither working nor looking for work.”

The ONS said there was also a return to wage growth, with average earnings increasing 3.1% in January.

It comes after a steady slowdown in earnings, with wages growing at 2.9% in the previous period.

The jobs market also appeared in healthier shape as the number of vacancies rose by 19,000 to 817,000 for the three months to February.

Howard Archer, chief economic adviser at the EY Item Club, said: “The latest jobs data indicate that the UK labour market was robust at the start of 2020 before coronavirus started to become a factor.

“This was despite the fact that GDP had stagnated in the fourth quarter of 2019 and was also only flat month-on-month in January.”

Pawel Adrjan, UK economist at Indeed, said: “There’s more than a touch of Alice in Wonderland about these jobs figures.

“They paint a broadly rosy, but now hopelessly outdated, picture of a labour market which is having to adapt to a completely new reality.

“January’s joint record high employment rate and the record low inactivity rate – two metrics which show a labour market in rude health – are now likely to be high watermarks.”

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