Unemployment Decline Confounds Analysts

18 October 2001

Albion’s analysts are re-stirring their alchemic cauldrons after their consensus prediction of a rise of 2,500 in UK unemployment was confounded on Wednesday.

The number of British citizens claiming unemployment benefit unexpectedly fell by 4,900 to 942,100 in September, reported the Office for National Statistics. Although the fall is insufficient to cause even a blip on the chart, its significance lies in bucking the increase predicted by the woe-mongers.

The national unemployment level remains unchanged at 3.1 per cent – the lowest since October 1975. But jubilation should be constrained, say analysts, many of whom doubt that the trend will continue against the current economic background.

They point to a watershed in the labour market – during the summer the number of those in employment dropped by 19,000 to 28.16 million, whereas the unemployment rate as defined by the International Labour Organisation increased over the same period by 53,000 to marginally over 1.5m.

The discrepancy between the two sets of figures lies in the ILO’s definition of unemployment: all adults seeking work but unable to find it [WAMN’s italics]. Those without jobs but not actively seeking work are therefore excluded from the total.

Meantime, average earnings during the three months to August rose 4.5 per cent year-on-year, compared with a July rate of 4.6%. The overall total was restrained by a decline in private sector earnings from 4.4 per cent to 4.2%, while public sector earnings growth was unchanged at 5.8%, with most wage settlements for 2001 already concluded.

According to the Bank of England monetary policy committee, earnings growth of around 4.5% per cent is consistent with the government’s official inflation target of 2.5%.

News source: Financial Times