U.K. jobless claims rose less than economists forecast in March and a broader measure of unemployment fell for the first time for almost a year, signs that the labor market is stabilizing as the economy recovers.
Jobless-benefit claims rose by 3,600 from February to 1.61 million, the Office for National Statistics said today in London. The median forecast of 29 economists in a Bloomberg News survey was for a gain of 6,000. Unemployment as measured by International Labour Organization methods fell to 8.3 percent in the quarter through February from a 16-year high of 8.4 percent. No change was forecast.
The figures provide a boost for Prime Minister David Cameron, who faces criticism from the opposition Labour Party that he is damaging the recovery by trying to cut the budget deficit too quickly. Employment rose in latest period, suggesting hiring by private companies is making up for the loss of tens of thousands of public-sector jobs.
“These figures look pretty good and are suggestive of some reasonable underlying momentum in growth,” said David Tinsley, chief U.K. economist at BNP Paribas SA in London and a former Bank of England official. “The fact that unemployment is stabilizing is very good news for the government.”
Minutes of the Bank of England’s March policy meeting published today showed Adam Posen ended his push for further stimulus and David Miles said his view on the need for more was “finely balanced” as officials said inflation may turn out faster than forecast.
The pound rose against the dollar after the reports and was trading at $1.5969 as of 11:09 a.m. in London, up 0.3 percent on the day.
The increase in the number of people claiming jobless benefits last month was the 17th in succession and the smallest since December. It left the claimant-count rate at 4.9 percent, the highest since 1997. In February, jobless claims rose 4,500 rather than the 7,200 initially reported.
In the three months through February, ILO unemployment fell 35,000 to 2.65 million people. A third, 883,000, had been looking for work for more than a year.
That figure will rise to almost a million by year-end, the Institute for Public Policy Research said today in a report that describes long-term unemployment as “the hidden crisis of the slowest ever economic recovery in the U.K.”
Data suggest growth resumed growth in the first quarter, though Ernst & Young LLP’s ITEM Club predicted this week the economy will expand just 0.4 percent this year, half the pace seen by the Office for Budget Responsibility and the International Monetary Fund. The OBR, which produces forecasts for the Treasury, last month predicted ILO-based unemployment will peak at 8.7 percent this year.
Strains in the labor market remain. British clothing brand and retailer Aquascutum yesterday collapsed into administration, jeopardizing about 250 jobs. British Airways, the U.K. unit of International Consolidated Airlines Group SA, said on April 11 it plans to cut jobs at London Gatwick airport to respond to increasing competition from low-cost carriers.
Still, companies including Tesco Plc and Nissan Motor Co. have announced plans to add thousands of jobs in recent weeks and Chancellor of the Exchequer George Osborne claimed vindication for a budget that cut the tax rate on corporate profits after GlaxoSmithKline Plc said last month it will create more than 1,000 posts in the U.K.
Today’s figures show the number of people in work climbed by 53,000 to 29.2 million between December and February, though the increase was entirely driven by an 80,000 increase in part- time work, suggesting employers remain cautious about hiring. The number of people working part-time because they could not find a full-time job climbed to 1.4 million, the most since at least 1992.
Underlining the squeeze on household budgets, pay growth slowed from 1.3 percent to 1.1 percent in the three months through February, the lowest since mid 2010 and a third of the pace of consumer-price inflation. The slowdown was caused by a sharp fall in bonuses, particularly at financial-services firms. Wage growth excluding bonuses was unchanged at 1.6 percent.
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