Tags: UK | Jobless | Claims | Rise

UK Jobless Claims Rise for First Time Since January

Wednesday, 15 Sep 2010 07:39 AM

U.K. jobless claims unexpectedly increased in August for the first time in seven months, a sign the economic recovery may be faltering.

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.

Bank of England policy maker Martin Weale told lawmakers yesterday that public-spending cuts to address the nation’s record budget deficit may weigh on the recovery in the labor market. The bank maintained emergency stimulus for the economy last week amid signs growth may be cooling.

“The fundamentals are not particularly encouraging for a significant pickup in labor demand given that credit conditions remain tight and firms are cautious,” James Knightley, an economist at ING Financial Markets, said in an interview before the report. “There’s not going to be much reason for the bank to raise interest rates.”

The pound dropped more than 0.1 percent against the dollar after the report, and traded at $1.5497 as of 9:33 a.m. in London. The benchmark yield on the two-year government bond was up 2 basis points today at 0.677 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.

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.

Inactivity Rate

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.

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.”

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.”

Governor’s Speech

Bank of England Governor Mervyn King will address the TUC meeting in Manchester, England at 11:30 a.m. today. 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.

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U.K. jobless claims unexpectedly increased in August for the first time in seven months, a sign the economic recovery may be faltering. Claims for unemployment benefits rose by 2,300 to 1.47 million, the Office for National Statistics said today in London. The median...
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2010-39-15
Wednesday, 15 Sep 2010 07:39 AM
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