UK unemployment total falls again

13 July 2011 Last updated at 11:44 GMT The number claiming Jobseeker's Allowance jumped by over 20,000 for the second month running UK unemployment fell 26,000 in the three months to May to 2.45 million, official figures show.

The unemployment rate was 7.7%, according to the Office for National Statistics (ONS), down from 7.8% in the previous quarter.

However, the number of people claiming Jobseeker's Allowance in June rose by 24,500 to 1.52 million - the biggest such increase in two years.

It follows an upwardly-revised 22,500 rise in the claimant count for May.

Benefit changes

The total number claiming unemployment benefits reached its highest level since March 2010, while the claimant count rate held steady at 4.7%.

It is the second month in a row that the claimant count has risen while the unemployment total - which is based on a separate survey - has fallen.

The ONS said part of the discrepancy between the two measures was due to an increase in the number of women claiming Jobseeker's Allowance due to changes in the benefits system.

The employment report said that the number of long-term unemployed fell by 37,000, although there was also an 11,000 increase in the number of people out of work for less than a year.

The number of 16 to 24-year-olds out of work fell by 42,000.

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There are parts of London and Scotland where around 30 dole claimants are chasing every vacancy”

End Quote Brendan Barber TUC general secretary Many economists look at the claimant count as a more current indicator of the health of the labour market.

"While [the unemployment survey] data suggest some tentative improvement... more up-to-date information suggests that weakness lies ahead," said Chris Williamson, economist at research firm Markit.

"The number of job vacancies... fell by 7,000 between the first and second quarters of the year, and Markit's recent survey of recruitment consultancies showed that the number of people placed in permanent jobs showed the weakest rise for 22 months in June."

Pay subdued

The total number in employment rose 50,000 versus the previous quarter to 29.28 million - the highest total in more than two years.

Continue reading the main story Hugh Pym Chief economics correspondent, BBC News

There is something for the jobs market optimists and something for the pessimists in these figures. Unemployment has fallen again, including among 16-24 year olds, while total employment is on the increase.

But nearly two-thirds of the increase in employment was due to part time jobs. Vacancies in the economy have fallen - and that excludes census positions.

Optimists will argue that the private sector is at least creating work. Pessimists will question the quality of the jobs created and whether there is a sustainable recovery in the labour market.

Pay also continued to rise at a subdued rate.

Average earnings, excluding bonuses, rose a faster-than-expected 2.1% in the three months to May - well short of the inflation rate, which fell slightly to 4.2% in June.

"It's worth remembering that employment didn't fall nearly as much as expected in the recession, partly because businesses retained staff through short-time working, wage cuts and other mechanisms," said Nigel Meager, director of the Institute for Employment Studies.

"The other side of this coin, however, is that many employers now have the staffing capacity to respond when the economy returns to growth, without hiring new people.

"Given that growth itself is fairly weak, it's unsurprising that the overall labour market remains in an anaemic state, as confirmed by these figures."

Chasing jobs

The employment report indicated that the number of new jobs created in the private sector was still outstripping government job losses.

The public sector workforce shed 24,000 during the three months to May, far less than the 104,000 new positions created by the private sector.

"Today's headline unemployment figures show some encouraging news," said TUC general secretary Brendan Barber.

"However, looking at the data more closely, there are worrying signs for the future."

Besides the rise in the claimant count, he also pointed to "a big jump in the ratio of unemployed people to job vacancies, from a national average of five people chasing each job to 5.4".

"There are parts of London and Scotland where around 30 dole claimants are chasing every vacancy - and in Haringey there are 39 people after every available job."

David Kern, chief economist for the British Chambers of Commerce, agreed that there were causes for concern among the generally positive figures.

These included a rise in the number of economically inactive people, and a new record number of people working part-time because they could not find a full-time job.

"The private sector is willing and able to create jobs, but we must not be complacent," he said.

"It is likely we will see more public sector job cuts in the coming months, and we are expecting unemployment to increase by 150,000 to a peak of 2.6 million over the next 12 to 15 months."

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UK jobless figure falls sharply

15 June 2011 Last updated at 12:22 GMT John Philpott from the Chartered Institute of Personnel and Development says unemployment may rise again

UK unemployment fell 88,000 in the three months to April this year to 2.43 million, the biggest drop since the summer of 2000, latest data shows.

The unemployment rate was 7.7%, according to the Office for National Statistics (ONS), down from 7.9% in the previous quarter.

However, the number of people claiming Jobseeker's Allowance in May rose by 19,600 to 1.49 million.

The rise was the biggest since July 2009, and larger than expected.

"The economy created more than half a million jobs over the last year," said BBC chief economics correspondent Hugh Pym.

"So even after the public sector shed just over 140,000 posts, total employment was still well ahead over twelve months."

The official unemployment figure - which is based on a survey - has been falling in recent months.

In contrast, the claimant count - which has now risen for the third month in a row - has been telling a much more downbeat story about the state of the jobs market.

However, analysts caution that some of the rise in the claimant count may be attributable to changes in benefits rules, which have seen many people move off other kinds of benefits onto the Jobseeker's Allowance.

Public versus private

The number of people who left unemployment during the quarter was almost matched by the number who entered new jobs, according to the latest ONS survey data.

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There is something puzzling - and potentially troubling - about the employment growth we've seen in the past year or so”

End Quote Stephanie Flanders Economics editor, BBC News The employment total increased by 80,000 to 29.24 million.

Employment minister Chris Grayling hailed the data as "very encouraging", and told the BBC that it showed the private sector was creating jobs much faster than the public sector was losing them.

Over the course of 12 months to the first quarter of this year, private sector employment rose by 520,000, while the public sector cut numbers by 143,000, leaving left total employment up by about 376,000.

But shadow employment minister Liam Byrne told the BBC: "When you look beneath the headlines, it turns out that most of those jobs were created last year, and the private sector is now creating jobs at a much slower pace.

"The number of vacancies is down, and we've still got three regions in Britain where unemployment is... going up quite significantly.

"A year and a half after the recession ended, that's just not good enough."

The unemployment rate fell most rapidly in Northern Ireland, down 0.8 percentage points to 7.2%, and Wales, down 0.7 percentage points to 7.9%.

In both Scotland and England, the rate fell only slightly, to 7.7%.

But within England there was considerable regional variation, with the North West, East and South West also all seeing more people out of work.

Chartered Institute of Personnel and Development chief economist John Philpott said underlying the jobs figures was "quite a sad story for many people and hard times still to come".

Continue reading the main story Hugh Pym Chief economics correspondent, BBC News

The economy created more than half a million jobs over the last year.

So even after the public sector shed just over 140,000 posts, total employment was still well ahead over twelve months.

That's the most attention-grabbing revelation in the welter of labour market statistics out today.

It adds weight to the argument that the private sector can generate enough jobs to take up the slack left by the retreating public sector.

There were a few wrinkles.

The number of people working part time because they could not find a full time job increased to just over 1.2 million, the highest since modern records began.

The number claiming Jobseeker's Allowance rose in May.

The headline figures today are welcome but nobody is ready yet to predict a sustained downturn in unemployment

Many were trading down to find jobs, while those in work were seeing their incomes squeezed, he added.

The level of cuts already seen "indicates that the scale of public sector job cuts is going to be quite substantial, because we haven't yet had the full impact of the government spending cuts", he said.

TUC head Brendan Barber agreed that the UK labour market was "still very fragile and a long way off the level of jobs we had before the recession".

Nonetheless, he welcomed the apparent fall in youth unemployment. The jobless rate among 16 to 24-year-olds fell from 20.7% to 19.4%, according to the ONS.

Subdued wages

The latest data also revealed that earnings growth slowed in the three months to April, with earnings excluding bonuses up just 2% on a year ago - its slowest rate since last August.

It follows figures on Tuesday showing that the UK inflation rate remained at 4.5% in May, and is expected to rise further, implying that the real purchasing power of average wages is being steadily eroded.

"The fact that workers can't push for higher wage increases in this difficult economic environment means that real wages are going to continue to struggle," said Peter Dixon, economist at Commerzbank.

Employment minister Chris Grayling: "The private sector is creating jobs much faster than the public sector is losing them"

"I think that is one factor which will act against a sharp pick up in consumer spending. And without a pick up in consumer spending, it's very difficult to see how we are going to get a major rally in [growth] going forward."

The pound fell half a cent against the dollar following the data release, to $1.63, while the FTSE 100 index also dropped slightly.

"The market is reacting to the claimant count number and the wages data which are weaker than expected," said Amit Kara at UBS.

Analysts say that the subdued rate of wage growth reduces the chance that the Bank of England will raise interest rates this year, which in turn makes the pound less attractive on currency markets.

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