LONDON: The United Kingdom labour market strengthened after the government’s benefit programme for those out of work in the pandemic came to an end, bolstering the case for the Bank of England (BoE) to raise interest rates as soon as next month.

       Companies added 160,000 more people to their payrolls in October, while vacancies surged to a record high, according to data released. The figures suggest very few of the 1.1 million workers who were on furlough became unemployed when the programme finished in September.

       That underscored the success of the 19-month plan that protected workers from the impact of national lockdowns. The pound jumped 0.3% after the report, which BoE governor Andrew Bailey said yesterday would be one of the last bits of evidence the Monetary Policy Committee (MPC) needed before deciding when to raise rates for the first time since the pandemic struck.

       “The labour market appears to have escaped the end of the furlough scheme relatively unharmed,” said Thomas Pugh, economist at the accounting firm RSM UK. “The continued robust recovery in the labour market will reassure those MPC members who were concerned about damage from the ending of the furlough scheme.

       “The first official data on jobs since the government withdrew its furlough programme suggests it hasn’t derailed the recovery in employment. That news leaves the BoE on course to lift rates in December,” Dan Hanson, Bloomberg’s economist, said.

       The next jobs report, which will contain official data on the employment and unemployment rates for October, will be released two days before the central bank’s decision in December. Economists and markets both expect the BoE to hike rates by 15 basis points at that meeting.

       “We expect the bank will wait with the first hike until February,” said Yael Selfin, chief economist at KPMG UK. “But given the good news this morning, an earlier move in December cannot be ruled out.”

       Surveys suggest the vast majority of those furloughed at the end of September returned to work. A Resolution Foundation survey published at the weekend found that only 12% – around 136,000 people – were no longer employed in October – and most of those were inactive rather than unemployed.

       That chimes with the Office for National Statistics (ONS) survey that found only 3% were made redundant.

       The Institute for Employment Studies estimates that the pandemic has left the UK with a workforce shortage of 950,000. The research group defined that measure as the difference between the number of people in the labour market now and what would have been expected based on pre-crisis trends.

       Just over half a million are older workers who have dropped out of the job market. Up to a third of that is from lower migration, and the rest are younger people who have gone into education.

       “Today’s numbers are testament to the extraordinary success of the furlough scheme and welcome evidence that our Plan for Jobs has worked,” Chancellor of the Exchequer Rishi Sunak said in a statement.

       “It’s fantastic to see the unemployment rate falling for nine months in a row and record numbers of people moving into employment.”

       The number of unemployed people per vacancy, a key measure of pressure for staff, fell to 1.3. That’s the lowest since at least 1971, according to analysis of the ONS data by the Institute of Employment Studies. ― Bloomberg