UK jobless claims rise at fastest pace in 2 years
Source: Agencies |
June 16, 2011, Thursday
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Print Edition
Print Edition
THE number of Britons claiming jobless benefits rose at its fastest pace in almost two years in May, casting doubt on the health of the labor market despite a big fall in another key measure of unemployment.
The Office for National Statistics said yesterday the number of people claiming jobless benefits in May rose by 19,600, more than double the forecast increase of 7,000 and the biggest rise since July 2009.
However, the number of people without a job on the wider ILO measure fell by 88,000 to a two-year low of 2.43 million in the three months to April, the biggest decline since August 2000. That took the jobless rate to 7.7 percent, in line with forecasts and down from 7.9 percent between November and January.
"Markets tend to focus on the claimant count numbers, which politically is the one that attracts the most attention and is also slightly more timely," said Lloyds economist Adam Chester.
"But we would argue that possibly the market has misread these figures and over-egged the reaction. The ILO figures give a broader view of the labor market."
Economists struggled to interpret the news because ongoing changes to benefits rules had been pushing up the claimant count measure, and overall the figures did little to alter the view that monetary policy needs to stay on hold for some months as the economy regains its footing after a weak start to 2011.
"We doubt that employment growth will remain this strong if the economic recovery continues to struggle," said Vicky Redwood of Capital Economics. "What's more, pay growth is not picking up at all."
Wage growth slowed in the three months to April, with pay excluding bonuses rising 2 percent - its weakest pace since last August. Including bonuses, average earnings rose 1.8 percent - the weakest since December 2010 and below forecasts for a rise of 2.1 percent.
The Office for National Statistics said yesterday the number of people claiming jobless benefits in May rose by 19,600, more than double the forecast increase of 7,000 and the biggest rise since July 2009.
However, the number of people without a job on the wider ILO measure fell by 88,000 to a two-year low of 2.43 million in the three months to April, the biggest decline since August 2000. That took the jobless rate to 7.7 percent, in line with forecasts and down from 7.9 percent between November and January.
"Markets tend to focus on the claimant count numbers, which politically is the one that attracts the most attention and is also slightly more timely," said Lloyds economist Adam Chester.
"But we would argue that possibly the market has misread these figures and over-egged the reaction. The ILO figures give a broader view of the labor market."
Economists struggled to interpret the news because ongoing changes to benefits rules had been pushing up the claimant count measure, and overall the figures did little to alter the view that monetary policy needs to stay on hold for some months as the economy regains its footing after a weak start to 2011.
"We doubt that employment growth will remain this strong if the economic recovery continues to struggle," said Vicky Redwood of Capital Economics. "What's more, pay growth is not picking up at all."
Wage growth slowed in the three months to April, with pay excluding bonuses rising 2 percent - its weakest pace since last August. Including bonuses, average earnings rose 1.8 percent - the weakest since December 2010 and below forecasts for a rise of 2.1 percent.
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