UK job figures hint at wreckage to come

Official job figures showed employment rising before the Covid-19 crisis hit but a preliminary estimate for March contained evidence that the virus was beginning to take its toll.

Employment rose by 172,000 in the three months to February, ahead of expectations, as the employment rate reached a new record high of 76.6%, the Office for National Statistics reported.

The figures cover the period before fears about the Covid-19 outbreak gripped the UK, culminating in a near shutdown of the economy near the end of March. The increase was mainly powered by women in employment, young workers and those aged more than 65.

Economists on average expected a 108,000 increase in employment. A more recent claimant count figure showed a 12,100 rise in people registering for unemployment benefit on 12 March, before most businesses began to shut down.

The clearest sign of the effects of Covid-19 on employment was a "flash" reading of payroll data which showed employment fell by 17,500 in March from February. That figure was supported by stronger results for most of March before the shutdown.

Economists expect the figures to become nightmarish soon as the full wreckage of the shutdown is revealed. Unemployment is expected to surge as the UK enters a recession that the government's fiscal watchdog estimates could cause economic output to shrink by more than a third in the second quarter.

Paul Dales, chief UK economist at Capital Economics, said: "February’s Labour force survey data aren’t very useful as they precede the social distancing measures that began in mid-March. "The small crack evident in the latest batch of labour market data may soon turn into a chasm with the unemployment rate rising from 4% to almost 9%."