The job market is 'stable' but 'subdued' as the unemployment rate fell to 4.9% from 5% in the three months to February, official figures have shown.
Despite job vacancies surging as businesses prepared to reopen after lockdown, the number of workers on UK payrolls dropped for the first time in four months in March, the Office for National Statistics (ONS).
Five million people remain on furlough and there more than 800,000 fewer employees than there were pre-pandemic, it said.
Chancellor Rishi Sunak has extended the furlough scheme to support workers through to the end of September and experts predict unemployment will ramp up once it ends.
The figures showed more than half of the people losing their employment were under-25.
It is hoped that the economy will bounce back from a record 10% plunge in 2020 as restrictions ease and the vaccination programme continues to roll out, helping soften the blow on the jobs market.
But there were further signs that the jobs sector is stabilising, with the first quarterly fall in the unemployment rate since 2019 between December and February and statistics signalling a near-16% jump in vacancies in March.
Darren Morgan, director of economic statistics at the ONS, said: “The latest figures suggest that the jobs market has been broadly stable in recent months after the major shock of last spring."
He continued: “There are, though, over 800,000 fewer employees than before the pandemic struck, and with around five million people employed but still on furlough, the labour market remains subdued."
In response to the latest jobs data, Mr Sunak said: “Protecting jobs and the economy has been my main focus since this pandemic began – through the furlough scheme alone we have protected 11.2 million jobs.
“As we progress on our road map to recovery I will continue to put people at the heart of the Government’s response through our Plan for Jobs – supporting and creating jobs across the country.”
In response to the figures, Jonathan Reynolds MP, Labour’s Shadow Secretary of State for Work and Pensions said: “Unemployment is persistently high yet the Government’s programmes to get people back into work are still not up and running.
"These figures show more than half of the people losing their employment were under-25 but the Conservative’s struggling Kickstart scheme has created just 6,000 jobs."
Overall unemployment stood at 1.68 million between December and February, down 50,000 on the previous three months, according to the ONS.
Employment was down 73,000 on the quarter at 32.4 million.
The claimant count – another measure that includes people working with low incomes and hours, as well as people who are not working – rose 0.4% month-on-month to 2.7 million in March.