UK unemployment nears 2-year high in July, as pandemic claims 750,000 jobs since March

• The UK’s unemployment rate rose to near two-year highs at 4.1% in July, as almost 750,000 jobs were lost since March this year.
• The number of employees on payroll fell by 695,000 since March, despite the three months to July marking the period of relaxed lockdown restrictions.
• The claimant count rose by 120.8% since March to reach 2.7 million in August. 
• Latest data might not present the true extent of job losses in Britain as “the numbers still don’t include those who have yet to return to work from furlough, and as such aren’t classified as unemployed quite yet,” a chief market analyst said.
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The coronavirus pandemic cost 750,000 people their jobs in the UK between March and August and pushed the unemployment rate above 4% for the first time since October 2018, according to data released Tuesday by the national statistics agency. 

The number of paid employees fell by around 695,000 in the five months to August, the Office for National Statistics said, reflecting the largest annual increase since 2009. 

The UK unemployment rate rose to a two-year high of 4.1% in August, up from 3.9% in the previous three-month period.

Estimates for May to July showed that 32.98 million people, aged 16 and over, were employed. That number is 202,000 higher than a year ago, but 12,000 fewer than the prior quarter.

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The claimant count — those who claim universal credit and job seeker’s allowance – rose by 120.8% since March to reach 2.7 million in August. 

Growth in employee pay slowed in July after strong declines in the prior three months, mostly strained by lower pay for furloughed employees and reduced bonuses. 

As some employees resumed normal work, nominal pay, which excludes the effects of inflation, turned positive between May to July after having been negative in the previous three-month period. 

The latest economic data “could well add further color to the extent of the economic pain that the coronavirus pandemic has inflicted on the UK economy,” said Michael Hewson, chief market analyst at CMC Markets. 

Furthermore, ONS data may not present the true extent of job losses in Britain. Even though the headline unemployment rate moved up to 4.1%, “the numbers still don’t include those who have yet to return to work from furlough, and as such aren’t classified as unemployed quite yet,” Hewson said.

On a brighter note, he said, at least two-thirds of the furloughed staff are now back at work. However the final 2 million or so people may find they don’t have a job to go back to, if current social distancing guidelines remain in place going into next year, and the current furlough program, which is due to end next month, does not continue.

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