Tuesday 18 May 2021

UK unemployment down - how big will the bounce be?

So unemployment has fallen in the UK, very unexpectedly in the last quarter. Down only from 4.9% to 4.8%, but to fall during a lockdown is really quite something. 

Clearly later this year there is going to be some fallout from the end of furlough, where a couple of million people might well suddenly lose their jobs and almost double the unemployment rate. However, as the economy bounces back the idea everyone is going to lose their jobs sounds less credible. 

Also we lost 1 million people to the work force post-Brexit and Covid - a huge hit. It is why you can't sell a London property at the moment. This worker shortage is going to take up a lot of the Covid pressure. Meanwhile, high skilled labour is still in higher demand and short supply - all those data analysts and basically anyone who is an advanced computer use. 

So we many even see, against expectations, some wage increase pressure later in the year and the beginnings of a large inflationary wave. With the new India variant in circulation, things might go a bit sideways for a while, but it is hard to see 2021 as a bad year outside of airlines and hotels. 

This must all bode well for the markets and the economy as a whole for the near future. One day there is going to be a price to pay for the buoyancy we are seeing now sprayed around by the money printing and debt the Government has taken on. I think 2022 might be a much darker year than 2021 economy wise. 


Nick Drew said...

Having read both CU and BQ's contrasting accounts, is there a good report somewhere on the differential regional (UK) property market reactions to covid?

(Perhaps with good graphics for the simple-minded in-a-hurry reader?)

lilith said...

Property prices have rocketed in our part of Summerzet. Indeed, someone from London just bought two overpriced properties in the village and has taken a lease on yet another....Only the rented one is currently lived in, the other two are for weekends or in case lockdown never ends. A cool £2M. Soon only public sector workers on furlough and Londoners will be able to afford to buy around here...

Bill Quango MP said...

It’s Covid flight.
In the southwest and south coast the leave London retirees are realising that a £600,000 priced home, is a luxury one. Baronial in style, six bed, drawing,dining, kitchen, half acre garden. Pond and workshops.

I see my old house in Surrey is on the market. A three bed, Georgian style, 1980’s semi detached in a very good area, super convenient for m25 and with good London train links. But only a single reception room, small kitchen without room for table or island. and small garden. About 1200ft of house.
It is on for £650,000. A sum that would buy a in Wiltshire a 5,000 sq foot period house. Actual Georgian. Not mock.

Of the last five or six viewing we had on our own home, all were from London or Home Counties. Cashing in on the disparity in price rises.
Can’t complain. We did it ourselves during the last refugee wave, fifteen years ago.
The dining table from that semi-detached is in the smallest spare room in our current house. I use it as a spare desk. When we moved and put it in the dining room it looked ridiculous as it was so small. Like a coffee table.

There is almost nothing to buy or rent within ten miles of my son’s school. Nothing at all except the very dregs or the insanely over priced, or the inconveniently sited..

I am currently looking fifteen miles out. And very little available.

It will all crash soon enough. But the lack of anything to buy is keeping prices high.

Anomalous said...

"we may even see, against expectations, some wage increase pressure later in the year"

Already happening. I spent 8 months without income after being rolled off my contract mid-pandemic. The week that Boris announced the roadmap, I had four offers on the table from 7 or 8 interviews.

Two of those offers paid significantly higher day rates than I've ever had. I asked the recruiter at my new shop why the pay was so good (after signing the contract, obviously). He replied that it was due to Brexit and Covid. Lots of Europeans, and lots of Britons who weren't born and bred in London, simply upped sticks and went home.

So, seems inflationary right now. But, if those returning to the provinces are happy to work remotely for half what they earned in the City, and companies are happy for them to do so, it might not turn out that way longer term.

lilith said...

It's mad isn't it Bill? My former (Tower Hamlets) council flat complete with pissy lift would cost you half a million! Should have waited....

Anonymous said...

£600k on the south coast does not buy luxury. It hasn’t done for many a year.
£400k will get you an extremely average terrace in Brighton
£900k plus will get you a lovely place but you’ll have to way that up against ‘location location location’ somewhere along the coast

E-K said...

A dead cat bounce.