The latest ONS data contained mixed news on the labour market. On the positive side, the economy continued to create jobs at the end of 2021. Payrolled employees rose by 184,000 in December, the unemployment rate notched down to 4.1% in the three months to November and the number of job vacancies rose to a new record high of 1.25 million in the fourth quarter.

Less positively, real pay growth turned negative as wages were outstripped by consumer price inflation in November. Moreover, total hours worked are still below the pre-pandemic level and inactivity remains high.

That combination of high vacancies and low unemployment means labour market tightness reached another record — there were just 1.1 unemployed people per job vacancy in the three months to November. The need to get more people back into the workforce from the sidelines remains key to addressing persistent worker shortages.