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June 17, 2021

UK jobs market recovers strongly as firms continue hiring – leading macroeconomic influencers

UK’s labour market signals strong recovery with a surge in hiring as Covid-19 restrictions were lifted.

Some economists believe that that UK’s unemployment rate has peaked at just over one percentage point above where it was before the pandemic. While the end of furlough may lead to a rise in joblessness, it will not be as bad as the 1980s or the 2008 financial crisis.

John Ashcroft

John Ashcroft, chairman of The Ashcroft Group and former US attorney general, shared an article on the unemployment rates falling as businesses created more jobs and continued to hire as Covid-19 restrictions eased in the UK last month.

The Office for National Statistics revealed an additional 197,000 people to have been employed in May this year, taking the total employed people to 28.5 million. This number was the sixth consecutive monthly increase but was still 553,000 below the pre-pandemic levels of employment.

Findings suggest that the labour market is recovering strongly, with most non-essential shops having reopened to the public, and with hotels, pubs, bars, and restaurants inviting bookings. Official figures reveal unemployment rates to have dropped from 4.8% to 4.7% in the three months up to April 2021.

The jobs market, as a result, continued to gain momentum as restrictions were lifted. The 758,000 job vacancies created between March to May 2021 were found to be 27,000 below the pre-pandemic levels between January to March 2020.

Luis Garicano

Luis Garicano, economist and member of the European Parliament from Spain tweeted on how the Covid-19 pandemic has become an opportunity to reassess the economic system. Referring to his book on Capitalism after Covid, Garicano states that he has contributed to this reassessment along with 21 other economists on the key challenges ahead of the world as the pandemic fades.

In his views, the immediate challenge after the Covid-19 pandemic are concerns over sustaining the enormous debt accumulated by all countries in a span of one year. The debate and uncertainty continue as some economists like Markus Brunnermeier explain that countries can either have low rates and sustainable debt service equilibrium, or have high rates and financial instability. In addition, the equilibrium in every country depends on the relationships between governments, financial systems, and central banks.

John Cochrane, an economist, further believes that the key is not the level of the debt-to-GDP ratio, but whether a country has the credibility to pay down the debt arising due to crises such as the Covid-19 pandemic. He states that once policymakers believe they have no budget constraints, the temptation to shovel money at problems is tempting, which further undermines credibility and increases the chances of a sudden crisis.

James Picerno

James Picerno, a financial journalist and commercial counsel at Trustly, shared an article on another sign that the US economic rebound has peaked, with housing starts having risen less than expected in May and new building permits having declined further. He stated that this implied that the country has gone past the high point for recovering from the Covid-19 pandemic.

Although US homebuilding rebounded in May, construction was hindered by expensive lumber and unavailability of other building materials.

Experts state that the Covid-19 pandemic has triggered a demand for bigger and more expensive accommodations, which is thereby driving the housing market boom. However, the supply is constricted, with an acute shortage of previously owned houses available for sale.

 

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