Traders and investors’ focus lies on the Fed Chair’s two-day testimony and the E.U Summit, but some other interesting economic data was out. Such data was the job market data in the United Kingdom, where both the continuing claims and the unemployment rate were released two days ago.
The claimant count change showed a total of 86.6k people applying for unemployment benefits in the U.K., in sharp contrast to the 9k expected. On a positive note, the unemployment rate stabilized somehow around the 5% level.
Because the U.K. is one of the countries that inoculated a big part of its adult population against the COVID-19 virus, it is worth comparing the jobs data with similar countries. In this case, with the United States. We see the unemployment rate dropping significantly in the U.S., but rising in the U.K., the main difference being in the fiscal response between the two countries.
The U.K., just like other European countries, focused on supporting the jobs, not the population. In sharp contrast, the U.S. focused on supporting households directly and not the jobs. Hence, the trend is even more troubling for the U.K. and deserves a closer look at the March 2021 job report details.
Details of the U.K.’s March 2021 Jobs Report
The simplest way to put it is that the report was a bit messy. On the one hand, the unemployment rate unexpectedly dropped, but employment also dropped, offsetting the good news. Also, foreign workers are down sharply, albeit less than before.
The truly worrying piece of data comes from interpreting the months during the pandemic year. The ONS revealed that almost 700k people lost their jobs during the pandemic, and, most strikingly, 88% of them aged under thirty-five. Also, over 180k workers left the U.K. last year, mainly due to the Brexit uncertainty and the fact that jobs have become scarce.
Coming back to the March report, some positive aspects are worth mentioning. One is the fact that the economy created 68k new jobs in February this year when compared to the previous month. However, the inactivity rate remains elevated, even higher than a year before, at 21%. For a country under lockdown, that is only normal.
All in all, a mixed report, positively affected by the over five million people on furlough and employers adapting better to restrictions. The GBP did not like the report, as the pound dropped on the news against both the euro and the dollar.