UK unemployment rate unexpectedly falls to 5% in January as the country looks ahead to reopening

• The jobless rate dropped to 5% in the three months to January, from 5.1% in the three months to December.
• Separate figures showed the number of people on payrolls picked up for the third month in a row.
• The UK has suffered badly during COVID-19 but is looking to reopen thanks to a quick vaccine rollout.
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The UK unemployment rate fell unexpectedly to 5% in the three months to January, data showed on Tuesday, in an encouraging sign given the country’s plans to gradually lift its coronavirus restrictions.

Britain’s headline unemployment rate fell to 5% from 5.1% in the three months to December, the Office for National Statistics said, beating economists’ expectations of an increase to 5.2%.

Separate figures showed 68,000 more people joined payrolls in February than in January, the third monthly increase, although 693,000 fewer people were on payrolls compared to a year earlier.

“After yet another monthly increase, there were almost 200,000 more employees on payroll in February than three months earlier,” Sam Beckett, head of economic statistics at the ONS, said.

Beckett said that of the almost 700,000 people who have fallen off payrolls, almost two-thirds have been under 25, over half worked in the hospitality sector, and almost a third have been in London.

The UK has suffered over 130,000 deaths from coronavirus and one of the worst economic tolls in the world.

But its unemployment rate has been held down by the furlough wage subsidy scheme. And the country has rapidly rolled out COVID-19 vaccines, allowing it to plot its way out of restrictions by the summer.

Non-essential stores may reopen as soon as April 12 if the government feels cases are under control, with hospitality venues such as pubs potentially allowed to resume business and serve people outside. All restrictions may then be lifted as early as June 21.

“The continued success of the vaccine rollout provides us with hope for the future, and through our plan for jobs, we will continue to support people throughout the months to come,” UK chancellor Rishi Sunak said.

UK markets showed little reaction to the data. London’s FTSE 100 index was down 0.43% in early trading, while the pound was off by 0.4% against the dollar at $1.3806.