Following the conclusion of the government's job-protecting furlough scheme in October, British firms employed more people, potentially easing the Bank of England's concerns about the risks of raising interest rates.
Based on statistics from tax authorities, the number of employees on firms' payrolls increased by 160,000 to 29.3 million, 0.8% more than in February 2020 before the pandemic hit. The unemployment rate dropped more than predicted to 4.3% in September from 4.5% the previous month, its lowest level since July 2020.
The Bank of England is debating when to raise interest rates and is keeping a careful eye on the labour market since the furlough scheme ended, with an estimated 1.1 million people on it in its final days.
People who were made redundant at the end of the furlough scheme may appear in the records as employed for a few more months while they worked out their notice period, according to the Office for National Statistics.
The ONS stated, "however, responses to our business survey suggest that the numbers made redundant were expected to be a small percentage of those still on furlough at the end of September 2021."
The significant increase in payroll employment, according to Suren Thiru, head of economics at the British Chambers of Commerce, suggested that the end of the furlough had little influence on the jobs market in October, and that demand for labour continued to climb.
"Record job vacancies signal that businesses' chronic staff shortages are worsening, which might derail the recovery by putting them into a longer-term decline in their operating capacity," he said.
According to official figures, employment increased by 247,000 in the July-September quarter, while the number of unemployed declined by 152,000.