UK unemployment claims rise the least
U.K. unemployment claims rose the least in a year in June, adding to evidence that the worst of the recession may have passed.
Jobless benefit claims climbed from May by 23,800 to 1.56 million, the highest level in 12 years, the Office for National Statistics said in London today. The median forecast of 29 economists in a Bloomberg News survey was for a 41,300 increase. Overall unemployment in the quarter through May increased by 281,000, the most since records began in 1971.
Prime Minister Gordon Brown is trying to pull Britain out of its worst economic contraction in five decades less than one year before the next election. Reports yesterday showed the housing market improved last month and retail sales rose from a year earlier, while Bank of England Deputy Governor Charles Bean said today the economy is probably “bumping along the bottom.”
“The second-quarter contraction won’t be as bad as the previous one,” said Amit Kara, an economist at UBS AG in London and a former Bank of England official. “The recovery will be there, though I think we should see unemployment increase at least until the middle of next year.”
The claimant-count increase on the month was the smallest since May 2008, the statistics office said.
Overall unemployment, measured by International Labour Organization standards, rose to 2.38 million, the most since 1995. The British Chambers of Commerce said last week that unemployment may reach 3.2 million by the middle of next year.
Global Comparison
The jobless rate on the ILO measure was 7.6 percent, the statistics office said. That compares with 9.5 percent in the U.S. and the euro region, and 5.2 percent in Japan.
Brown, who must call an election by next June, has seen voters’ support dwindle as the recession gathered pace. The opposition Conservative Party leads the ruling Labour Party by a 16 percentage-point margin, according to a YouGov Plc poll published in the People newspaper on June 28.
Bean says the recession has probably reached a bottom, though he also told BBC Radio Leeds this week that the economic recovery may be a “long haul” and it’s “inevitable” unemployment will keep increasing. He also said that Brown’s government would allow the Bank of England to surpass the 150 billion-pound ($245 billion) ceiling for asset purchases by a “reasonable amount” if necessary.
Job Cuts
For now, companies are still planning to shed workers. British Airways Plc said yesterday that it must push through job and pay cuts for the airline to survive the recession. Corus, Europe’s second biggest steelmaker, may shed as many as 366 workers at a factory in northeastern England.
The job market will eventually improve if a recovery takes root. The economy’s pace of contraction probably slowed to 0.4 percent in the second quarter from 2.4 percent in the first three months of the year, according to the National Institute of Economic and Social Research.
The housing market improved last month as more real-estate agents and surveyors in London said prices rose than fell, the Royal Institution of Chartered Surveyors said yesterday. Same- store retail sales increased 1.4 percent from a year earlier, the British Retail Consortium said.
The prospect of further job losses is keeping wages down. Excluding bonuses, earnings grew 2.6 percent, the least since records began in 2001. Average earnings in the three months through May rose 2.3 percent from a year earlier, the statistics office said.
Hays Plc, the U.K.’s largest recruitment company, said last week it will freeze pay for all staff including executives after the amount of fees it collected declined at an increasing rate.
Source: Bloomberg