Job vacancies soared to a record high of almost 1.2m in September, according to official figures, as employers hunted for staff to meet shortages brought on by Brexit and the pandemic.
The Office for National Statistics (ONS) figures also showed a 207,000 increase in the number of people on payrolls to a record 29.2 million – 120,000 above pre-pandemic levels – and a steep fall in unemployment before the furlough scheme came to an end at the end of September.
In the three months to July, vacancies grew across most sectors driven by a jump in demand for workers by shop owners and wholesalers while motor garages looked for 35,000 extra staff.
London experienced the biggest rise in employment as the capital made up ground with the rest of the country after a large drop during the pandemic, but unlike many other areas, failed to reach pre-pandemic levels.
Ministers were known to be concerned that many of the 11 million people who relied on the furlough scheme at some time during the pandemic would be unable to find work once it came to an end, but the continued fall in unemployment to 4.5% is likely to ease those fears.
However, analysts warned there was likely to be a return to higher rates of joblessness once the the 1 million people still on furlough when the scheme ended, many of them in older age groups, had lost the government’s job subsidy.
Yael Selfin, the chief UK economist at KPMG, said: “The recovery is testing the capacity of the economy to adjust to a new post-pandemic environment, a task made more difficult by the reduced availability of overseas workers.
“Last month’s ending of the furlough scheme could briefly raise the headline unemployment rate, which could average 4.9% for 2021 as a whole, representing a smaller impact than originally expected,” she added.
Julia Kermode, a founder of Nantwich-based small business IWork, said job shortages were so bad that “the UK’s army of temporary workers, the traditional back-stop for businesses in need, cannot meet the demand”.
“It’s incredibly competitive, with some firms opting to increase pay rates, but many businesses simply don’t have pots of money to throw at the problem,” she added.
In the three months to August, the employment rate increased by 0.5 percentage points to 75.3%, while the unemployment rate decreased by 0.4 percentage points to 4.5%.
Darren Morgan, the director of economic statistics at the ONS, said that during the summer the jobs market continued to recover from the effects of the coronavirus pandemic.
“However, the figures are still being affected by special factors that make it hard to read underlying trends,” Morgan added.
Average weekly earnings the June-August period were 7.2% higher than in the equivalent three months of 2020, slowing from the previous reading of 8.3%. Excluding bonuses, earnings rose by 6.0%, also losing some momentum.
The ONS estimated the underlying pace of wage growth, taking into account how job losses during the coronavirus lockdowns affected predominantly lower-paid workers, stood between 4.1% and 5.6% for regular pay in nominal terms. That compared with regular pay growth of about 3% just before the pandemic began.
The chancellor, Rishi Sunak, said the government was committed to helping people find work after the expiry of the furlough scheme.