There are a lot of expectations about employment figures out of the UK. But, unfortunately, an official measure of the coronavirus’ impact on the jobs market in the UK is going to have to wait a bit. The reason being is because tomorrow we get the release of jobs data from February. There is a month-and-a-half lag in the publication of official figures. But that doesn’t mean we should ignore the results.
For over a year, despite the ups and downs of Brexit and a General Election, the unemployment rate in the UK has remained fairly consistent around 3.8%. That is about to change, and rather dramatically, if the projections of analysts turn out.
What We Are Looking For
The key to this data is to look for any potential impact on the employment situation before the UK locked down. Let’s not forget that in February there were rumors of potential supply problems and slowing demand from the Far East. The unemployment situation might have already been weakening. That might drag down on the pound.
The consensus of projections shows a downward turn. The figure that the market pays the most attention to, the Claimant Count Change, is projected to increase slightly to 21.0K from 17.3K in January. Remember that this is the number of people seeking unemployment benefits. Therefore, the higher the number, the worse it is for the pound, generally.
Other Important Measures
The unemployment rate is also expected to tick up slightly to 4.0%, compared to 3.9%. This would break the sideways trend mentioned above. This is despite the UK not requiring any restrictions of movement yet during the month. The measure most important for inflation concerns, Average Weekly Earnings, is projected to drop slightly to 3.0% compared to 3.1%.
If we recall back in February, the BOE was already expressing concern about the economy. They were looking to potentially cut rates to support the economy. At the time, analysts were debating when, rather than if, there would be easing this year. Then, of course, the bottom fell out of the market and everything changed. The point is, that the employment situation was already creating concern. We must remember this when factoring in a “return to normal”.
Claims Are Building Up
More recent data comes from the preliminary or unofficial weekly statistics put out by the Department for Work and Pensions. These showed that in early April, welfare claims have jumped nearly 50% above normal. This would nearly double the number of people on unemployment. This further implies that when the March data is finally released, the UK will report an unemployment rate well in excess of 7.5%. That would be the worst it’s been since the “mini-crisis” following the Greek debt debacle.
There were just under 2 million people reported as unemployed at the end of February, according to private estimates. There is a further estimate that around 1 million more could lose their jobs by the time the UK starts seeking to re-opening the economy.
Let’s Not Get Ahead of Ourselves
The UK is certainly in for some troubling employment data, but don’t let a relatively good report this time around catch you by surprise.