The strength of the UK’s labour market has recovered to pre-pandemic levels for the first time, according to new research. The latest business trends report from business advisory firm BDO revealed the employment conditions improved for the fourth consecutive month in February.
BDO’s monthly employment index in the report increased to a reading of 110.75 for the month, representing a 0.77 point increase against the previous month. The reading represents the highest level on the index since February 2020, before the pandemic fully struck the UK.
It also sits significantly above the 95 point level which indicates growth in the UK labour market. This jump in the employment index was driven by the lifting of Covid restrictions and the associated improving economic outlook.
Consumer demand has rebounded significantly in recent months, stoking a need for more staff across many sectors. A shortage of workers due to Brexit and the pandemic has also made competition for employees fierce, the report also said.
The lifting of the remaining coronavirus restrictions has also led to a rise in BDO’s optimism index, which increased 0.9 points to 105.81 in February, marking a second consecutive month of improvement following December’s Omicron-related dip.
Kaley Crossthwaite, partner at BDO, said: “Propped up by the government’s furlough scheme, the UK jobs market was largely resilient throughout the pandemic. As we emerge from a series of lockdowns and return to normality, the jobs market is now moving from resilience to growth, reflected in February’s buoyant figures.
“While it’s promising to see growth in business optimism throughout February, this could be short-lived as inflation continues to rise at a faster rate than wages. Inflationary pressures are set to mount further over the coming months, with energy and fuel prices key drivers of this increase.”
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