UK jobs growth remains strong in November as BOE meets on rates

[LONDON] British employers added a record number of staff in November, adding to signs that the labour market withstood the end of the government's furlough scheme and underscoring the Bank of England's (BOE) dilemma as it meets on interest rates this week.

Figures from Britain's tax office showed 257,000 people were added to company payrolls last month, the most since records began in 2014.

The BOE, under pressure to address fast-rising inflation, has said it needs to be sure that the expiry of the furlough scheme at the end of September has not caused a jump in unemployment before any decision to raise rates for the first time since the pandemic.

But the emergence of the Omicron variant of the coronavirus at the end of November has prompted investors to scale back their bets on a rate hike by the BOE as soon as Thursday (Dec 16), after its December policy meetings.

"The combination of a tight labour market and low unemployment evident in today's data could on their own be sufficient to merit a rate rise under the Bank of England's November guidance," KPMG UK's chief economist Yael Selfin said.

"Nonetheless, with the emergence of the Omicron variant over the recent weeks, we now expect the MPC to unanimously hold off raising rates until next year."

The payrolls data, provided by Britain's tax office, showed October's increase was slashed to 74,000 from an originally reported 160,000.

"With still no sign of the end of the furlough scheme hitting the number of jobs, the total of employees on payroll continued to grow strongly in November," ONS director of economic statistics Darren Morgan said.

He cautioned that the figures could include people recently made redundant but still working out their notice.

Much of the recent growth in employment was among part-time workers, the ONS (Office for National Statistics) said.

Official data showed the unemployment rate fell to 4.2 per cent in the 3 months to October, as expected by economists polled by Reuters and down from 4.3 per cent in the three months to September.

Employment rose by 149,000 in the August-October period, less than a predicted increase of 228,000 in the Reuters poll, while the number of unemployed fell by 127,000.

The ONS said average weekly earnings were 4.9 per cent higher than in the same three months of 2020, the smallest annual increase since March.

Excluding bonuses, earnings were 4.3 per cent higher than a year earlier, the smallest rise since the 3 months to February.

The ONS said it was no longer estimating underlying pay growth excluding the impact of the furlough scheme and other pandemic-related factors which have distorted the data.

Job vacancies hit an all-time high of 1.219 million in the 3 months to November, although the pace of growth in new openings continued to slow.

REUTERS