U.K. Jobless Claims Fall Less Than Forecast as Growth StallsScott Hamilton
U.K. jobless claims fell less than economists forecast in February and a wider measure of unemployment rose for the first time in a year as the number of young people looking for work climbed.
Unemployment claims fell 1,500 from January to 1.54 million, the Office for National Statistics said today in London. The median forecast of 27 economists in a Bloomberg survey was for a drop of 5,000. In the quarter through January, unemployment as measured by International Labour Organisation methods rose by 7,000 to 2.52 million, the first increase since January 2012. Wages grew at the slowest pace since 2009.
The figures are a blow to Chancellor of the Exchequer George Osborne as he prepares to deliver another austere budget today. They suggest the labor market is slowing as the economy risks falling into a third recession in five years. Unemployment among 16-24-year-olds rose 48,000 in the three months through January, the biggest increase for almost 1 1/2 years.
“We suspect that unemployment will rise modestly later on in 2013,” Howard Archer, an economist at IHS Global Insight in London, said before the data was released. “It looks touch and go whether the economy will manage to avoid further contraction in the first quarter of 2013 and we doubt that growth over the year as a whole will be strong enough to prevent unemployment moving up.”
Constrained by his self-imposed budget-cutting targets, Prime Minister David Cameron is urging the Bank of England to support the recovery by pursuing an “activist” monetary policy.
Minutes of the Monetary Policy Committee’s March 6-7 meeting showed Governor Mervyn King was defeated for a second month in a vote to expand stimulus as the majority of policy makers said more bond purchases may erode their credibility and push the pound lower. The MPC voted 6-3 to keep the target for purchases at 375 billion pounds ($568 billion), the central bank said in the minutes.
Sterling erased declines against the dollar after the reports and was trading at $1.5140 as of 9:45 a.m. in London, up 0.3 percent on the day.
The claimant-count rate was unchanged at 4.7 percent in February, today’s report showed. In January, jobless claims fell 10,000 instead of the 12,500 initially estimated.
The number of people in work climbed 131,000 to 29.7 million during the quarter through January, the ONS said. The ILO unemployment rate was unchanged at 7.8 percent.
Public-sector employment fell by 20,000 to 5.72 million in the fourth quarter, the lowest since 2001. Private-sector employment rose by 151,000 to 24 million.
U.K. tour operator Thomas Cook Group Plc said this month it plans to cut 2,500 jobs, or 16 percent of the total, and drugmaker AstraZeneca Plc said on March 18 it will cut about 1,600 jobs as it overhauls research and development.
Until now, the labor market has proved resilient as the economy continued to create jobs in the face of stagnant growth. Britain’s economy shrank 0.3 percent in the fourth quarter of 2012 as factory output slumped, leaving it on the brink of an unprecedented triple-dip recession. The National Institute of Economic and Social Research estimated last week that the economy shrank 0.1 percent in the three months through February.
Today’s report showed that pay growth excluding bonuses slowed to 1.2 percent in the three months through January from 1.3 percent in the period through December. That was the lowest rate since December 2009. Total pay growth also slowed to 1.2 percent from 1.3 percent.