By Steve Goldstein
The U.K. jobs picture remains bleak, according to the latest data released on Tuesday, with a low unemployment rate masking a sharp drop in employment and a record fall in hours worked.
The Office for National Statistics said on Tuesday the unemployment rate in the three months to June stayed at 3.9%, against economist expectations for a rise to 4.2%. The ONS said that the flat jobless rate reflected fewer people looking for work.
There were 7.5 million people, more than a quarter of the workforce, counted as employed if they are temporarily away from a job and receiving no pay, or if they are furloughed using the government’s Coronavirus Job Retention Scheme.
“A wide range of indicators suggest that job losses will crystallize from August, when employers must start to cover some of the costs of furloughed staff,” said Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics.
“The past few weeks have already brought announcements of tens of thousands of job losses from high-profile firms, while a CIPD (Chartered Institute of Personnel and Development) survey released earlier this week suggested that one in three employers plans imminent job cuts,” said Chris Scicluna, an economist at Daiwa in London.
Employment during the quarter fell by 220,000.
Average actual weekly hours fell by a record 5.6 hours on the quarter to a record low of 25.8 hours.
The U.K. saw 94,400 more people file for unemployment benefits in July, which was more than the 77,500 expected in a poll of economists, and also includes those who can file for benefits while still being employed.
Pay continued to fall, with average weekly earnings in the three months to June falling 1.2% year-over-year, which is more than the 1.1% decline seen by economists.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0851% initially fell after the data, before turning higher.