British unemployment data paints mixed picture

15th June 2011, Comments 0 comments

Britain's jobless total fell by the biggest amount in more than a decade, but the claimant count experienced the largest gain in almost two years, according to mixed official data published on Wednesday.

The number of unemployed tumbled by 88,000 to 2.43 million people in the three months to April, the Office for National Statistics (ONS) said in a statement. That was the greatest decline since the three months to August 2000.

At the same time, however, the number of people claiming benefits rose by 19,600 between April and May to 1.49 million -- which marked the biggest increase since July 2009 and was the third successive monthly jump.

Expectations had been for an increase of just 5,000 in the claimant count, according to analysts polled by Dow Jones Newswires. However, the figure was inflated by major changes to the benefits system.

Economists also questioned whether the fall in unemployment can be sustained as the economy buckles under the weight of public-sector spending cuts and the prospect of future job losses set to spark industrial action later this month.

"The labour market is currently showing resilience in the face of a struggling economy, but the key question is can it last?" said economist Howard Archer at IHS Global Insight research group.

"We have serious doubts about this and suspect that unemployment will head up in the second half of the year as public sector jobs are increasingly pared and private sector companies become more cautious in the face of persistently sluggish growth."

However the ONS added on Tuesday that private-sector employment increased by 104,000 to 23 million in the first three months of 2011, while employment in the public sector sank 24,000 to 6.2 million.

The news was welcomed by British Prime Minister David Cameron's coalition government, which hopes that the private sector will create enough jobs to replace the 330,000 job cuts that are planned by 2015.

Nida Ali, economic advisor to the Ernst & Young ITEM Club, said that the sharp drop in unemployment was due to a time lag in the data releases.

"The fall in unemployment is mainly the lagged data catching up with the stronger claimant count figures seen earlier this year, and is nothing to be too excited about," said Ali.

"However, more notable is the steep rise in the claimant count in May. This is a more accurate reflection of the scale of weakness in the UK labour market and, as the pace of the public sector spending cuts accelerates, this trend is expected to continue over the coming year."

The ONS added Wednesday that the unemployment rate stood at 7.7 percent in the three months to the end of April. That was unchanged from the rate for the three months to March, but marked a drop from 7.9 percent in the three months to January.

Meanwhile, trade unions representing public sector workers are threatening to hold large-scale strikes later this month, possibly on June 30, to protest against job cuts in the coalition government's deficit-slashing austerity programme.

© 2011 AFP

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