Jobless claims rise unexpectedly in Britain

15th September 2010, Comments 0 comments

The number of people unemployed in Britain showed a surprising rise in August, official data showed on Wednesday, pointing to even tougher times once government budget cuts begin in earnest.

The so-called claimant count of people registered for unemployment benefit rose by 2,300 last month to reach 1.47 million -- the first rise since January, the Office for National Statistics (ONS) said in a statement.

Economists had forecast a fall of 5,000, according to a poll by Dow Jones Newswires.

"The labour market data are both disappointing and worrying overall, fuelling fears that the improvement in the labour market is coming to an end as companies' fears mount over the strength and sustainability of the upturn," said economist Howard Archer at the IHS Global Insight consultancy.

"This is even before public sector job cutting really gets underway. In particular, the number of claimant count unemployment edged up by 2,300 in August following a drop of just 1,000 in July. This compares to declines around 30,000 in May and April."

The data comes as Britain's trade unions voted overwhelmingly this week to back rare coordinated strikes to fight government austerity cuts.

The Trades Union Congress (TUC), being held in Manchester, has been dominated by angry attacks on Prime Minister David Cameron's coalition, which took power in May and plans deep public sector cuts to tackle a record deficit.

The Conservative-Liberal Democrat government will not give details of where the austerity measures will hit until a spending review on October 20, while they won't be implemented until April next year.

Some job losses have already been announced in councils and hospitals around the country, while some 60,000 police jobs could go according to the Police Federation, effectively the union for officers.

The ONS added on Wednesday that Britain's unemployment rate stood at 7.8 percent in the three months to the end of July, unchanged from the previous quarter.

The number of unemployed people dropped by 8,000 in the three months to the end of July to reach 2.47 million, which offset a record rise in employment of 286,000 over the same period.

"The UK labour data is very mixed," noted ING Bank analyst James Knightley. "On the one hand there is some remarkable strength ... employment rose 286,000 over the last three months, the largest increase on record.

"If this continues, the private sector will easily be able to absorb all of the public sector job losses that are in the pipeline.

"However, given that the data only shows unemployment falling by 8,000 over the last 3 months we have to think that there is some sort of seasonal problem going on with a surge in the size of the workforce."

He added: "With public sector job losses starting to come through and worries about the global outlook perhaps set to dampen private sector employment growth, unemployment is likely to remain stubbornly high.

"This will help contain inflation pressures whilst also keeping in place downside risks for consumer spending."

© 2010 AFP

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