ONS latest: modest summer recovery at risk of stalling as Britain heads into the winter

Unemployment hit 4.8% in this year’s third quarter running from July to September, according to figures released today by the Office of National Statistics. While this is relatively low by historical standards, it still represents a sharp (if not unexpected) rise of 0.9% on the previous quarter.  

Indeed, the period July to September saw a record number of redundancies, 314,000, which is up by more than 181,000 on the previous quarter and higher than at the height of the financial crisis in early 2009. Worryingly single-month and weekly estimates suggest that growth in unemployment has accelerated throughout this period. 

It has been suggested that Chancellor Rishi Sunak’s moves to extend the furlough – first until December and then March 2021 – came too late and at the cost of jobs in hard-pressed sectors of the economy. Tej Parikh, Chief Economist at the Institute of Directors, said: “The extension of the furlough scheme through to March is welcome as it has given directors certainty to plan ahead for their staff. Unfortunately, the change appears to have come too late in the day for some.” 

As in the last quarter, the hardest-hit groups appear to be men and the young. Male unemployment rate in the third quarter rose to 5.2%, an increase of 1% on the previous quarter. By contrast, female unemployment only hit 4.3%, up 0.4% on the previous quarter. The young appear to be even harder hit with the unemployment rate among 18-24 year-olds hitting a staggering 13.6% – as compared 4.2% for 25-34 year-olds, 2.8% for 35-49 year-olds, and 3.6% for 50-64 year-olds. 

The economic fallout has been spread uneven geographically speaking as well with the Northeast and London being the worst-hit areas. Unemployment hit 6.7% in the former, and 6% in the latter, both up 1.2% as compared with the previous quarter. Wales also saw a sharp rise in unemployment of 1.9% as compared with the previous quarter, but its overall rate remains just below the national average, at 4.6%. 

Vacancies have risen slightly to 525,000 in the period August to October, suggesting that there has been a slight recovery in some areas. This figure is up by 146,000 on the previous quarter (May to July 2020). However, this is still 278,000 fewer vacancies than the same August to October period last year – a decline of 34.6%. 

Indeed, across almost every sector, while vacancy rates have rebounded they are still a long way away from their pre-pandemic highs. Looking at accommodation and food services, the number of vacancies has risen from a low of 8,000 in April-June, with a significant portion of this period being concurrent with the first lockdown, to 30,000 in August-October.

However, this is still 62,000 fewer vacancies than in 2019’s third quarter a decline of 67.1%, the worst performance of any sector. Intriguingly, the only sector to have seen the number of vacancies rise as compared with this time last year is construction, but this has only been a modest increase of 2,000. 

All in all, the latest report from the ONS presents a gloomy picture. Unemployment is not too high by historical standards, but that is only because large parts of the economy have essentially been put on ice with support from the state. Even here, the government’s apparent determination not to extend the furlough further, before its very late in the day U-turn, seems to have triggered a flurry of redundancies.

What good news there is in the report comes in the form of vacancies. These seem to have mainly stemmed from a slight rebound following a lockdown nadir. Now, with a second lockdown back in place, it seems unlikely that these small green shoots of recovery will survive the winter frost.