U.K. Jobless Claims Increase for the First Time Since January
U.K. Jobless Claims Rise
Jason Alden/Bloomberg
The job market is showing signs of weakening as the economy braces itself for budget cuts of as much as a quarter from Prime Minister David Cameron’s government, to be outlined next month.
The job market is showing signs of weakening as the economy braces itself for budget cuts of as much as a quarter from Prime Minister David Cameron’s government, to be outlined next month. Photographer: Jason Alden/Bloomberg
U.K. Jobless Claims Increase First Time Since January
Jason Alden/Bloomberg
Claims for unemployment benefits rose by 2,300 to 1.47 million, the Office for National Statistics said today in London.
Claims for unemployment benefits rose by 2,300 to 1.47 million, the Office for National Statistics said today in London. Photographer: Jason Alden/Bloomberg
U.K. jobless claims unexpectedly increased in August for the first time in seven months, a sign the economic recovery may be faltering just as the government starts the country’s biggest austerity drive since World War II.
Claims for unemployment benefits rose by 2,300 to 1.47 million, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 24 economists was for a drop of 3,000. Overall unemployment in the quarter through July fell by 8,000 to 2.47 million.
The job market is showing signs of weakening as the economy braces itself for budget cuts of as much as a quarter from Prime Minister David Cameron’s government, to be outlined next month. Bank of England policy maker Martin Weale said yesterday the public-spending squeeze may weigh on the labor-market recovery and unions are pledging coordinated strike action.
“The unemployment numbers are a disappointment,” said Neil Mackinnon, an economist at VTB Capital in London and a former Official at the British Treasury. The data “highlight the difficulties facing the U.K. economy. This will also increase tensions between trade unions and the government.”
The pound dropped more than 0.1 percent against the dollar after the report, and traded at $1.5557 as of 2:22 p.m. in London. The yield on the benchmark two-year government bond was up 2 basis points today at 0.683 percent.
The claimant-count unemployment rate stayed at 4.5 percent in August. Edinburgh-based Royal Bank of Scotland Group Plc, Britain’s biggest government-controlled bank, said Sept. 2 it will cut 3,500 U.K. jobs and close 10 offices to reduce costs.
Job Cuts
Galliford Try Plc, the U.K. construction company that upgraded Wimbledon’s Centre Court tennis stadium, has cut as many as 15 percent of its jobs in construction, and may slash another 5 percent in anticipation of government spending reductions, Chief Executive Officer Greg Fitzgerald said today.
The U.K. unemployment rate based on International Labour Organization standards held at 7.8 percent in the three months through July. That compares with 10 percent in the euro region, 9.6 percent in the U.S. and 5.2 percent in Japan, the statistics office said.
Employment still increased in the quarter through July by 286,000, the most since records began in 1971. The total of people in work reached 29.16 million, the highest level since the first quarter of 2009, the statistics office said.
Government Jobs
Public-sector employment fell for a second quarter in the three months through June, a separate report from the statistics office showed. The drop of 22,000 was offset by a gain of 308,000 in the private sector in the quarter through July.
Barclays Plc, Britain’s third largest bank, said Sept. 6 it plans to create up to 600 jobs in Glasgow with a new facility for its investment banking and wealth management divisions.
Statistics officials noted that the decrease in the unemployment level followed the biggest quarterly drop in the inactivity rate since 1984. That was the result of a decline in the number of students not active in the labor market.
“Overall, the data are a bit mixed,” said Philip Shaw, an economist at Investec Securities in London. “There will be little real improvement in the labor market with the risk of public-sector job losses and no real pickup in growth.”
Budget cuts will “act as a drag on employment,” Weale said yesterday. “The labor market has stabilized in recent quarters” though “the outlook for employment will depend on the strength of the recovery in demand and developments in productivity.”
Union Action
Unions representing more than 6 million workers voted Sept. 13 to coordinate industrial action and build support for public demonstrations in a campaign to stop the spending squeeze. Brendan Barber, general secretary of the Trades Union Congress, said the cuts risk pushing Britain into a “double-dip recession.”
Bank of England Governor Mervyn King told the TUC today that “the big picture is that unemployment is higher than before the crisis but lower than many had feared a year ago.” Speaking in Manchester, England, King said the government’s deficit-cutting plan was a “key part” of rebalancing the economy.
The bank left the benchmark interest rate at a record low of 0.5 percent on Sept. 9 and its bond-purchase plan at 200 billion pounds ($310 billion).
Forecasts for the recovery are mixed. The global economy may not generate much employment growth in coming years, with Europe most at risk of a sluggish and jobless recovery, International Monetary Fund Managing Director Dominique Strauss- Kahn said Sept. 12. The European Commission raised its forecast for U.K. growth this year to 1.7 percent from 1.2 percent.
Weekly pay including bonuses rose 1.5 percent in the three months through July from a year earlier, up from a 1.1 percent gain in the second quarter, the statistics office said. Excluding bonuses, pay increased by 1.8 percent.
To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net
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