UK unemployment rate fell slightly from May to July

According to the report from the Office for National Statistics, the most recent data show the labour market continuing to recover.

The number of payroll employees showed another monthly increase, up 241,000 to 29.1 million in August 2021, returning to pre-coronavirus (COVID-19) pandemic (February 2020) levels.

Following a period of employment growth and low unemployment, since the start of the pandemic the employment rate has generally decreased, and the unemployment rate has increased. However, since the end of 2020, both have shown signs of recovery. In the latest period (May to July 2021), there was a quarterly increase in the employment rate of 0.5 percentage points, to 75.2%, and a decrease in the unemployment rate of 0.3 percentage points, to 4.6%. The economic inactivity rate is down 0.3 percentage points on the previous quarter, to 21.1%.

The number of job vacancies in June to August 2021 was 1,034,000, which is the first time vacancies have risen over 1 million since records began, and is now 249,000 above its pre-pandemic January to March 2020 level. Vacancies grew on the quarter in June to August 2021 by 269,300 (35.2%), with all industry sectors increasing their number of vacancies and the majority reaching record levels; the largest increase was seen in accommodation and food service activities, which rose by 57,600 (75.4%).

Growth in average total pay (including bonuses) was 8.3% and regular pay (excluding bonuses) was 6.8% among employees for the three months May to July 2021. However, annual growth in average employee pay is being affected by temporary factors that have inflated the increase in the headline growth rate: base effects where the latest months are now compared with low base periods when earnings were first affected by the coronavirus pandemic, and compositional effects where there has been a fall in the number and proportion of lower-paid employee jobs, therefore increasing average earnings.