The UK economy has had two major boosts this week with growth in the economy and in the jobs market, according to figures from the Office for National Statistics (ONS).

After the nightmare of the Covid lockdowns, job vacancies have hit a record high and wage increases are growing, while gross domestic product (GDP) is estimated to have grown by 4.8 per cent in the second quarter of the year.

It will be good news for British business, particularly SMEs who are now looking to grow their firms after months on life support.

Despite predictions that the winding down of the Coronavirus Job Retention Scheme, or furlough, which finishes at the end of September, job losses would rise, the number of vacancies hit 953,000 in the three months to July, having grown by 290,000 compared with the previous quarter.

The unemployment rate fell to 4.7 per cent in the three months to June, while the annual growth in average pay was 7.4 per cent.

The figures show the number of employees on payrolls rose by 182,000 between June and July to 28.9 million, a rise of 576,000 people and up two per cent compared with the previous year.

Meanwhile GDP for the second quarter is now 4.4 per cent below the pre-pandemic level at the end of 2019. There have been increases in services, production and construction output across the quarter, with the largest contributors being wholesale and the retail trade, accommodation and food service activities plus education.

Growth occurred in nearly all areas with household consumption being the largest contributor.

Despite the good news, the ONS added a cautionary note about the jobs market.

ONS deputy statistician Jonathan Athow said: “While we are going in the right direction, there is some way to go. We are not back to pre-pandemic levels (say of 16-24 employment), and usually the labour market has lagged changes in GDP, so it might take us a little while to see a fully normalised picture.

“There are also some positive signs for the future with high levels of vacancies, and notable increases in some of the sectors that were hardest hit during the pandemic. If these vacancies feed through in more jobs, we should see increased employment in coming months.”

On wages rises he added: “When we look at wages this year, when people have come back from furlough, it’s really been boosted by the fact that last year wages were quite low. Some of this group was just wages returning to the level before the pandemic.”

Arts, leisure and food service firms were among those making a big contribution to the surge in job openings.

Posted in Blog.