Thursday, 16 July 2009

Unemployment Up!

The Office for National Statistics yesterday reported that the jobless claimant count rose 23,800 in June, compared with May's downwardly revised increase of 30,800. June's increase was almost half the 40,500 rise forecast by economists and the lowest monthly gain since May 2008.

But unemployment, according to the broader UN International Labor Organization measure, rose by 281,000 to 2.38 million in the three months to May, the highest quarterly increase since records began in 1971. That pushed the unemployment rate in Britain to 7.6%, up 0.9 percentage point from the previous three months. Economists (capitalist) have said the data contained some positive news, but cautioned that unemployment will continue to rise well into next year.

A breakdown of the claimant count data showed that the level moved higher for the 16th consecutive month, pushing the overall figure to 1.56 million, its highest reading since July 1997. The claimant count jobless rate rose to 4.8% in June from a downwardly revised 4.7% in May. It was last higher in October 1997.

Economists said the increasing divergence between the two key measures could indicate that newly jobless workers aren't claiming benefits as they hunt for vacancies, which remain at a record low.

"The growing divergence of the figures paint a mixed picture and concluding that a slowing claimant count is good news for the U.K. economy would be an unwarrantedly optimistic comment to make," said Philip Shaw, an economist at Investec.

The U.K. economy is facing its worst recession for 50 years, according to official statistics, although recent indicators have suggested that prospects are improving, with retail sales, business confidence and the housing market all edging up in June.
But then on the other hand fast-falling earnings information indicated that a growing number of workers are taking pay cuts, accepting pay freezes or going part-time to hold onto their jobs, which economists have said would constrain consumer spending and could hamper an economic recovery.

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