Hopes that Britain's economy is starting to recover from recession were boosted by a surprise fall in unemployment to its lowest rate since June 2011 while the number of people in work hit the highest level ever recorded.
Unemployment on the International Labour Organisation measure fell by 50,000 to 2.5 million in the three months to August, pushing the jobless rate to 7.9% from 8.1%, according to the Office for National Statistics.
City economists had expected the rate to stay stable. This compares with 10.5% in the EU – Spain had the highest unemployment rate at 25.1% in August while Austria had the lowest at 4.2%.
The number of employed people in Britain rose by 212,000 to 29.6 million, the highest since records began in January 1971, although more than half of the increase was a result of part-time job creation.
A survey from Legal & General showed 78% of workers feel secure in their jobs this month. Jobless benefits claimants dropped by 4,000 to 1.6 million last month, confounding expectations of a flat outturn.
This came after a sharp fall of 14,200 in August, which the ONS attributed partly to hiring in London for the Olympics.
The Olympic organisers said the games required about 6,000 paid staff, up to 70,000 volunteers and around 100,000 contractors.
"Once again, UK data has rebutted the claim that the UK is as bad as some of the eurozone's struggling economies," said ING economist Rob Carnell."Progress was evident across a broad range of the labour report.
With revised GDP data suggesting the UK returned to underlying growth in the second quarter, this labour data provides hope that this recovery has been ongoing over recent months, raising some doubt about whether the monetary policy committee will unleash a new round of asset purchases next month."
Minutes of the MPC's last meeting a fortnight ago showed that while the committee voted unanimously to keep interest rates and the £375bn bond-buying programme unchanged, members were split over whether more economic stimulus would be needed in future.
The ONS data also showed that youth unemployment improved, with the number of 16 to 24-year-olds out of work falling below a million in the three months to August, down 62,000 compared with March to May. That took the jobless rate among young people down to 20.5% from 21.8%.
Wage growth finally picked up across the economy, with average earnings rising by 1.7% in the three months to August from a year earlier. Wages have failed to keep up with inflation, which was above 5% a year ago taking the gap to over 3%.
The squeeze on household incomes has now eased considerably with regular pay, excluding bonuses, up 2%, inching closer to the rate of inflation at 2.2%.
John Hawksworth, chief economist at PricewaterhouseCoopers, noted: "The fall in public sector employment has slowed considerably since March while private sector employment has risen significantly.
This supports our view that the economy should see a gradual recovery during the second half of this year."
There are still some areas of concern, in particular further increases in long-term unemployment and the growth in part-time and freelance work.
But the resilience of the labour market has puzzled economists, at a time when the UK economy slipped back into recession. One explanation is that companies have been able to hang on to more people by keeping wages low.
Scott Corfe, senior economist at the Centre for Economics and Business Research, said: "UK employers may be behaving in a different way during this economic crisis compared with previous crises.
Instead of shedding jobs, many employers seem to be favouring pay restraint and reduced working hours as a means of controlling costs."
guardian.co.uk
Unemployment on the International Labour Organisation measure fell by 50,000 to 2.5 million in the three months to August, pushing the jobless rate to 7.9% from 8.1%, according to the Office for National Statistics.
City economists had expected the rate to stay stable. This compares with 10.5% in the EU – Spain had the highest unemployment rate at 25.1% in August while Austria had the lowest at 4.2%.
The number of employed people in Britain rose by 212,000 to 29.6 million, the highest since records began in January 1971, although more than half of the increase was a result of part-time job creation.
A survey from Legal & General showed 78% of workers feel secure in their jobs this month. Jobless benefits claimants dropped by 4,000 to 1.6 million last month, confounding expectations of a flat outturn.
This came after a sharp fall of 14,200 in August, which the ONS attributed partly to hiring in London for the Olympics.
The Olympic organisers said the games required about 6,000 paid staff, up to 70,000 volunteers and around 100,000 contractors.
"Once again, UK data has rebutted the claim that the UK is as bad as some of the eurozone's struggling economies," said ING economist Rob Carnell."Progress was evident across a broad range of the labour report.
With revised GDP data suggesting the UK returned to underlying growth in the second quarter, this labour data provides hope that this recovery has been ongoing over recent months, raising some doubt about whether the monetary policy committee will unleash a new round of asset purchases next month."
Minutes of the MPC's last meeting a fortnight ago showed that while the committee voted unanimously to keep interest rates and the £375bn bond-buying programme unchanged, members were split over whether more economic stimulus would be needed in future.
The ONS data also showed that youth unemployment improved, with the number of 16 to 24-year-olds out of work falling below a million in the three months to August, down 62,000 compared with March to May. That took the jobless rate among young people down to 20.5% from 21.8%.
Wage growth finally picked up across the economy, with average earnings rising by 1.7% in the three months to August from a year earlier. Wages have failed to keep up with inflation, which was above 5% a year ago taking the gap to over 3%.
The squeeze on household incomes has now eased considerably with regular pay, excluding bonuses, up 2%, inching closer to the rate of inflation at 2.2%.
John Hawksworth, chief economist at PricewaterhouseCoopers, noted: "The fall in public sector employment has slowed considerably since March while private sector employment has risen significantly.
This supports our view that the economy should see a gradual recovery during the second half of this year."
There are still some areas of concern, in particular further increases in long-term unemployment and the growth in part-time and freelance work.
But the resilience of the labour market has puzzled economists, at a time when the UK economy slipped back into recession. One explanation is that companies have been able to hang on to more people by keeping wages low.
Scott Corfe, senior economist at the Centre for Economics and Business Research, said: "UK employers may be behaving in a different way during this economic crisis compared with previous crises.
Instead of shedding jobs, many employers seem to be favouring pay restraint and reduced working hours as a means of controlling costs."
guardian.co.uk
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