The proportion of people in work in Britain has risen to an all-time high, though a sharp fall in the number of vacancies suggests that employers remained cautious about hiring in the run-up to last week’s general election, official figures showed Tuesday.
The Office for National Statistics said the number of people in work rose by 24,000 to 32.8 million in the the three months to October, pushing the employment rate to the new all-time high of 76.2%. Meanwhile, unemployment fell to 3.8%, its joint-lowest level since 1975.
Though the jobs figures have remained solid over the past few years of Brexit uncertainty, there are concerns about the coming months. That was highlighted by Tuesday’s figures on job vacancies, which fell for the tenth month running, this time by 20,000 from the previous three-month period to below 800,000.
Though much of the uncertainty surrounding Britain’s departure from the European Union has diminished following the overwhelming election victory for Prime Minister Boris Johnson’s Conservatives, there are still worries about the future relationship between Britain and the EU and that could hobble the economy in 2020.
Johnson now has a majority to easily get his Brexit withdrawal bill through the House of Commons in time for Britain to leave the EU by the scheduled departure date of the end of January. After that, Britain is set to remain in the tariff-free single market and customs union until the end of 2020.
Reports on Tuesday indicated that Johnson wants to create a law to ensure that deadline cannot be extended. That has raised concerns in financial markets that Britain could face another cliff-edge moment in just over a year. If no trade deal is agreed on, Britain and the EU would in that situation have to slap tariffs on each others’ goods and impose a series of other barriers to trade. The pound was down 1% at $1.3195 following those reports.
With Brexit uncertainty already making a comeback and investment set to remain low in 2020, hiring appetite is unlikely to improve significantly any time soon, said James Smith, developed markets economist at ING.
However Brexit plays out, the Bank of England is widely expected to keep its main interest rate, the bank rate, on hold at 0.75% on Thursday. Though the economy has slowed over the past year, growing by a near seven-year low of 0.7% in the year to October, the jobs figures remain strong and near-term Brexit uncertainty has diminished.
Demand for labor remains strong enough to stop the (Bank of England) from cutting Bank Rate over the coming months, said Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics.