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PwC comments on ONS December labour market figures

18/01/22

Jake Finney, economist at PwC UK, says,

"The UK labour market continued its strong recovery in November but there are tentative signs it may be starting to lose steam, with the headline unemployment rate falling to 4.1% in the three months to November, only slightly above the pre-pandemic levels of around 4.0%.

"Meanwhile, vacancies have broken records once again as they climbed to 1.2 million in the three months to December. However, vacancy growth has slowed for the second consecutive period, suggesting demand for labour could be close to its peak.

"High demand for labour is also not translating into higher wages for workers, who saw their real wages falling by 0.9% in November. This will provide no respite to workers who will see their taxes and energy bills rise sharply in the coming months. 

"Further challenges lie ahead. The Omicron variant has intensified labour shortages, with some of the hardest hit sectors, such as accommodation and food services, seeing as many as 6-7% of their workforce on sick leave or not working due to COVID-19 in late December. 

"At the same time, consumer demand has fallen as some decide to avoid shops and restaurants while cases are high. While this may ease some of the current pressures on businesses that are struggling with labour shortages, it could set back the labour market recovery if firms respond to lower demand by cutting back on hiring in the coming months."

 

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