Job vacancies are on the rise but the economy still needs its government drip-feed

Insolvencies also fell but some of the data has an illusory quality given the amount of state support UK plc is currently in receipt of, writes James Moore

Vacancies are rising but the UK economy isn’t yet out of the woods (Getty)

Whether your glass is half full or half empty, you’ll usually be able to find something to make your case when the Office for National Statistics (ONS) drops a set of data concerning Britain’s labour market.

On the face of it, the latest release had a lot more for the glass-half-full crowd, which might explain why the chancellor, Rishi Sunak, who’s been keeping his head down in the midst of the scandal created by the collapse of lender Greensill, broke cover to applaud the figures.

It showed the number of job vacancies hitting their highest level since the start of the pandemic, with 657,000 recorded between February and April, up 48,400 over the previous quarter.

The monthly figures with which the ONS has been experimenting showed the rise continuing through April.

The graph it produced showed a sharply rising trend, a near V-shaped recovery. The hospitality and entertainment sectors were singled out for a little headteacher’s praise, but a comfortable majority of them were in positive territory.

That those two were particularly frothy can be explained by the economy’s tentative reopening.

Unemployment has, meanwhile, fallen a bit (from 4.9 per cent to 4.8 per cent). It’s worth recalling that the Bank of England at one point feared that the jobless rate could hit a high of 7.75 per cent by the middle of the year. It is now predicting 5.5 per cent. Economic forecasters frequently get a bad rap, but right now they deserve forgiveness. Forecasting anything in the age of Covid is a bit of a mug’s game.

Want more sunny stats? Corporate insolvencies fell by 7.2 per cent to 925 in April when compared with March’s figure, and by 22.9 per cent compared with the number recorded in April last year.

There were, however, still some bits and pieces to point to for those who lean glass-half-empty.

The number of vacancies was still almost 128,000 below-pre pandemic levels and, of course, there is that Indian variant. It’s giving scientists a case of the shivers. Perhaps economists should wrap up warm too. There may yet be tiers before bed time and we all remember how bad, and confusing, the last lot of those were before they morphed into the latest full-scale lockdown.

There were also still about 4 million people on furlough, with their salaries supported by the government’s job retention scheme. Just imagine what the figures would look like if that wasn’t there.

So it’s clear that UK plc isn’t out of the woods.

The fact that it’s getting easier to find work is still unequivocally good news whichever way you look at it, but for that to continue the economy needs to continue its steady reopening without Covid variants throwing spanners in the works.

R3, the trade body for insolvency practitioners, says government support has prevented a significant number of businesses from becoming Covid casualties. It has also spared us a jobs crisis.

Because of it, however, some of the data has an illusory quality.

The economy as a whole rather resembles a patient taking a few cautious steps forward with a drip feed still attached to their arm.

The challenge facing Sunak and the Treasury is to manage the needle’s removal so that walk can be accomplished without the patient tripping up and falling flat on their face.

Get it wrong and at least some of the Treasury’s good, if expensive, work could come undone. The chancellor should therefore be prepared to err on the side of caution by keeping the tubes attached for as long as possible, even if that does mean turning a blind eye to the monthly borrowing figures.