UK jobless claims rise as labor market slows
UK jobless claims rose at the fastest pace in more than a year and job creation slowed, suggesting the labor market is succumbing to a fragile economic outlook.
Jobless-benefit claims rose 10,100 to 1.58 million in October, the biggest increase since September last year, the Office for National Statistics said today in London. The median of 28 estimates in a Bloomberg News survey was for no change. Employment based on International Labor Organization methods rose 100,000 in the three months through September, half the pace of the previous period, as a boost from the London Olympics began to fade.
Economists predict unemployment will begin rising in coming months as companies respond to a weak economic outlook by freezing hiring or cutting payrolls. Bank of England Governor Mervyn King will discuss the strength of the economy's recovery from recession as he unveils new growth and inflation forecasts at a press conference in London at 10:30 a.m. today.
"Because growth is still quite sluggish there will be sluggish employment growth, and the unemployment rate may edge up a bit," said Ross Walker, an economist at Royal Bank of Scotland Group Plc (RBS) in London. "There's every indication for now that policy is on hold, and it's hard to see at this juncture why they'd do more quantitative easing." The pound rose against the dollar after the report and was trading at $1.5901 as of 9.53 a.m. in London, up 0.2 percent on the day. ILO unemployment between July and September fell 49,000 to 2.51 million, though figures prepared on an experimental basis showed an increase of 53,000 in September alone, the statistics office said. Long-term unemployment continued to rise.
There are "really positive signs" in today's data, though "I don't think any of us are complacent about the scale of the challenges that we face," U.K. Employment Minister Mark Hoban said in an interview on BBC Television.
The jobless rate fell to 7.8 percent from 7.9 percent in the three months through August. The rise in jobless claims last month left the claims rate at 4.8 percent. In September, jobless claims rose by 800 instead of the 4,000 drop originally reported. It was the first back-to-back increase in claims since June and followed eight months of decline.
In London, jobless claims rose by 2,900 in October, suggesting volunteers and temporary workers hired during the Olympics are once again looking for work.
With economic output no higher than it was a year ago, economists have struggled to explain the strength of the labor market. Possible reasons include an increase in part-time work and self-employment. Downward pressure on wages meanwhile is helping companies avoid the need to shed staff by holding down labor costs. Average earnings grew an annual 1.8 percent in the three months through September, compared with 1.7pc in the previous period.