BRITAIN’S jobless rate has fallen for the first time since the pandemic struck, despite the latest lockdown shutting large parts of the economy, according to official figures.

The Office for National Statistics (ONS) said the rate of unemployment edged back to five per cent between November and January, down from 5.1 per cent in the previous three months.

Economists had expected the rate to rise to 5.2 per cent.

The data also showed the number of workers on UK payrolls increased for the third month in a row, up 68,000 or 0.2 per cent in February, in what experts said was a further sign that the jobs market was stabilising.

But payroll worker numbers have now fallen by 693,000 since February 2020 after a devastating year, with more job losses to come after furlough ends.

More than half of this fall – 368,000 jobs – were lost in the hospitality sector as lockdowns and restrictions hammered the industry, according to the figures.

The ONS added that 123,000 payroll jobs were also lost in the hard-hit retail sector, while more than 60 per cent of the total fall over the past year was for those aged under 25 in a sign of the toll taken by the crisis on young workers.

Chancellor Rishi Sunak said: “Coronavirus has caused one of the largest labour market shocks this country has ever faced, which is why protecting, supporting and creating jobs has been my focus throughout this crisis.

“We have taken decisive action with a £352 billion package of support.”

Niamh Corcoran, policy adviser, North East England Chamber of Commerce said: “Figures released today suggest that the labour market is beginning to stabilise. The extension of business support and the clearer picture of the route out of restrictions is likely to be bolstering business confidence.

“However, the Government’s Job Retention Scheme is very likely to be distorting these figures. The scheme is supporting businesses and employees through the current lockdown and successfully preventing redundancies. What remains uncertain is how many jobs will be lost as the furlough scheme is wound down in the Autumn.

“What is still concerning is the North-East’s disproportionately high unemployment rate, of 6.2 per cent compared to the UK average rate of five per cent.

“The region entered the crisis with higher rates of regional unemployment compared to more prosperous areas of the UK.

“Without commitment from Government to tackle our region’s unemployment rate and level up the whole of the North East, there is a risk that regional economic disparities could be widened and levelling up a pipe dream.”

Overall, unemployment stood at 1.7 million between November and January, up 11,000 over the quarter and 360,000 year-on-year, the ONS said.

Employment was down 147,000 in the quarter at 32.4 million.

The claimant count – another measure that includes people working with low income and hours as well as people who are not working – rose three per cent to 2.7 million.

The ONS added that the number of non-UK born workers on payrolls fell by 177,800 – or four per cent – year-on-year in the final quarter of 2020.

The figures showed an improving picture for job hunters, with 601,000 vacancies between December and February.

This is 26.8 per cent lower than a year earlier, but the decline has eased steadily from a near-60% drop last summer, though the ONS said the rate of improvement has slowed in recent months.

Official figures earlier this month showed the economy contracted by 2.9 per cent in January as the third lockdown started, but this was less than feared and a far cry from the double-digit fall of last April at the height of the first wave.

The Chancellor also extended furlough to September as part of extra Covid-19 support measures in the Budget.

This saw the Office for Budget Responsibility (OBR) revise down its forecasts for unemployment to peak at 6.5% by the end of the year – down from November’s estimate of 7.5 per cent.

Howard Archer, chief economic adviser to the EY Item Club, predicts the rate will peak at 6% in the fourth quarter.

He said: “The latest labour market data are somewhat mixed but show considerable resilience overall.

“This indicates that the extensions of the furlough scheme are having a significant impact in limiting job losses.”

But Suren Thiru at the British Chambers of Commerce cautioned: “With many firms struggling with the damage done to their cashflow by a year of Covid restrictions, unemployment is likely to remain on an upward trajectory until well beyond a full reopening of the economy.”