Despite the country being put back into lockdown in January, the jobless rate dipped over the quarter. The number of workers on company payrolls also rose by nearly 200,000 in the three months to February but overall the rate is down by 693,000 since February last year. But records showed signs of optimism with 601,000 job vacancies registered between December and February.
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.”
Unemployment was five percent between November and January, down by 0.1 percent on the previous quarter, according to the Office for National Statistics (ONS).
Economists had expected the rate to rise to 5.2 percent.
Younger workers and staff in the hospitality trade have been hit hardest by the pandemic.
The ONS records show 368,000 payroll jobs were lost in the hospitality sector over the last year as lockdowns and restrictions hammered the industry.
Another 123,000 went in the hard-hit retail sector after non-essential shops struggled to survive while being ordered to close their doors.
More than 60 percent of the total payroll fall over the past year was made up of workers under the age of 25.
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.
Overseas workers on payrolls fell by 177,800, four percent, from last year.
The Chancellor extended furlough to September as part of extra Covid-19 support measures in the Budget and experts fear not all will have jobs to go back to.
Sam Beckett, ONS head of economic statistics, said: “Furlough is still doing a lot of heavy lifting in the labour market. There are around five million people still on furlough, it’s down from its peak of nine million but has been rising recently.
“But you have to remember the underlying picture is that close to 700,000 people have come off the payroll since the start of the pandemic so there has been a large fall in employment since the start
“Around two-thirds of the fall is under-25s. London has been particularly hard hit.”
Howard Archer, chief economic adviser to the EY Item Club, predicted the unemployment rate will peak at six percent 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.”
Suren Thiru at the British Chambers of Commerce said: “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.”