Rise in number of jobless may delay hike in interest rates

A SHOCK rise in unemployment could delay interest-rate rises until next summer, economists said yesterday.

Unemployment has risen for the first time in more than two years, suggesting David Cameron’s ‘jobs miracle’ may be stalling.

The number of jobless increased by 15,000 to 1. 5million in the three months to May, the Office for National Statistics (ONS) said.

The number of unemployed claiming Jobseeker’s Allowance or Universal Credit rose by 7,000 in June to 04,000, the first monthly increase since 2012.

The figures were branded a ‘timely reminder’ that the economy is not ready for higher interest rates, which would hit millions paying off a mortgage or debts.

But the data also showed wages are rising

‘No one expected this’

at their fastest rate in six years – 2. per cent year on year, excluding bonuses.

Experts said improved pay could be behind the unemployment rise as it was more expensive to hire. They said firms were focusing on investing in training or increasing hours of staff instead.

The Prime Minister said he was ‘disappointed’ by the rise in benefits claimants and unemployment, but insisted the wages news meant there were ‘mixed messages’.

David Kern, of the British Chambers of Commerce, said: ‘It is certainly a surprise – no one expected this. We had started to believe that falling unemployment could go on forever, but today is a reminder that trends can quickly change ... it is a timely reminder that the UK economy is still fragile and should be supported.’

Vicky Redwood, of Capital Economics, said the figures would ‘help to persuade’ the Bank of England to keep interest rates on hold until April to June next year.