British unemployment claims fall after Brexit vote
LONDON: Britain witnessed a surprise drop in claims for unemployment benefits in July, the immediate aftermath of the country’s vote in favour of exiting the European Union, official data showed.
In the run-up to the June 23 Brexit referendum, Britain’s unemployment rate was meanwhile unchanged at 4.9 per cent – but analysts expect it to rise in the coming months despite the drop in benefits, or claimant count.
“Although the claimant count will be taken as a positive indicator of the UK economy post-referendum, the indications from the single month data suggest the unemployment may have troughed at 4.9 per cent,” said HSBC analyst Elizabeth Martins.
“Surveys point to, at the very least, a freeze in hiring for now. Any labour market weakening may take time to show through in the claimant count, if a former employee worked out their notice, for example, or delayed signing up to received unemployment benefits,” she added.
The Office for National Statistics (ONS) said Britain’s unemployment rate was unchanged at 4.9 per cent in the three months to June.
The quarterly reading – a low for 11 years – matched the figure for the three months to the end of May.
A total of 1.64 million people were officially unemployed in the reporting period, down 207,000 compared with one year earlier.
The ONS meanwhile added that the claimant count dropped by 8,600 in July, confounding expectations of a rise of around 9,000.
“In the first official indication of post-referendum labour market conditions, the claimant count measure of unemployment actually fell by a monthly 8,600 in July, the first drop in five months, suggesting that the vote to leave was yet to have a major impact on the jobs market,” noted Scott Bowman, an economist at Capital Economics research group.
ING bank economist James Knightley said in a note to clients that while “the UK labour market data for the three months to June looks good... we doubt that this will remain the case given the deterioration in business surveys following the Brexit vote”.
Fearing an economic slowdown and possible recession for Britain on business uncertainty and consumer caution in the wake of the vote in favour of Brexit, the Bank of England earlier this month took the decision to slash its key interest rate by a quarter point to a record- low 0.25 per cent. — AFP