British jobless claims rise again: official data

13th October 2010, Comments 0 comments

British jobless claims rose again in September but the number of unemployed fell, official data showed Wednesday, highlighting the labour market's fragile state before looming government spending cuts.

The so-called claimant count of people registered for unemployment benefits climbed 5,300 last month to reach 1.47 million -- the second successive monthly rise, the Office for National Statistics (ONS) said in a statement.

That was the biggest increase since January and compared with market expectations for a gain of 3,750, according to a poll by Dow Jones Newswires.

And the August claimant count figure was revised to show a gain of 3,800 people, which was bigger than the previously reported increase of 2,300.

"The latest UK labour market data provide further evidence that the labour market recovery is faltering, even before the public sector job cuts really begin," said Vicky Redwood, senior Britain economist at Capital Economics.

"The 5,300 rise in claimant count unemployment in September was the second monthly increase in a row and, although small, suggests that the trend has turned."

Next Wednesday, the British government will publish its comprehensive spending review, which is expected to deliver painful expenditure cuts in an attempt to slash an enormous public deficit.

A million people, half of them in the private sector, could lose their jobs in Britain as a result of biting government spending cuts, according to a report published on Wednesday by accountancy firm PricewaterhouseCoopers (PwC).

PwC said private sector firms -- particularly in areas like construction and defence -- would be hit hard by falling demand for their services from the public sector.

In response to the ONS data, ABN Amro economist Joost Beaumont said the labour market was running out of steam in the uncertain economic climate.

"The labour market recovery has lost momentum since the start of the third quarter, probably reflecting that companies are becoming reluctant to hire new personnel, as the economic outlook has become more uncertain, now that fiscal tightening is looming and the global economic recovery is loosing some strength," Beaumont noted.

The ONS added Wednesday that the number of unemployed people fell by 20,000 in the three months to the end of August to reach 2.45 million, the lowest level so far this year.

The jobless total fell as more 16 and 17-year-olds found work, or started training or education.

And the unemployment rate eased to 7.7 percent in the three months to the end of August, down from 7.8 percent in the three months to May.

"The data are mixed but overall but scratch under the surface and there are signs that the labour market is coming under increasing pressure from slowing growth and companies' mounting concerns over the economic outlook," agreed IHS Global Insight economist Howard Archer.

"This is even before the fiscal squeeze really kicks in and jobs start to be pared in the public sector."

© 2010 AFP

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