UK Jobless Claims Rise; Unemployment Rate At 16-Year High

UK Jobless Claims Rise; Unemployment Rate At 16-Year High




British jobless claims increased more than expected in January, reaching its highest level in two years, while the unemployment rate for the three months to December hit a 16-year high.
Data from the Office for National Statistics showed Wednesday that the claimant count in January was at a two-year high of 1.60 million, up 6,900 on the previous month, compared to economists' forecast for an increase of 3,000. The number of claims was up by 146,300 on a year earlier.
The claimant count rate was 5 percent, unchanged on the previous month but up 0.5 percentage points from a year earlier. This was in line with expectations.
The unemployment rate was at 8.4 percent for the three month ended December, the highest level since 1995. This also matched economists' forecast. Meanwhile, the rate for three months to September was revised down to 8.3 percent from 8.4 percent. The unemployment rate for those in the age group of 16 to 24 years was 22.2 percent in the three months to December 2011, up 0.3 percentage points from the three months to September 2011.
There were 2.67 million unemployed people in the U.K. during the December quarter, up 48,000 on the quarter. However, this was the smallest quarterly increase in unemployment since the three months to June 2011.
"The latest jobs data were mixed overall but the underlying deterioration does appear to have eased recently which supports hopes that the economy will return to modest growth in the first quarter and avoid recession," Howard Archer, a chief economist at IHS Global Insight, said.
The employment rate for the three months to December was 70.3 percent, 0.1 percentage point higher than the previous quarter. The number of people in employment increased by 60,000 on the quarter and by 7,000 on the year to reach 29.13 million.
"While there are some encouraging signs in the latest labor market data, we still suspect that unemployment is headed significantly higher over the coming months," Archer said.
The first quarter of 2012 will be the most difficult quarter for the jobs market since the recession, as a large number of private sector firms are planning to make redundancies going forward, a survey by Chartered Institute of Personnel and Development quarterly showed Monday.
Total earnings, including bonuses, rose 2 percent annually, while regular pay, excluding bonuses, also increased 2 percent, the statistical office said.
The U.K. economy contracted 0.2 percent quarter-on-quarter in the fourth quarter. To support the ailing economy, the central bank last week decided to infuse an additional GBP 50 billion to the system, taking the total size of its asset purchase to GBP 325 billion.
Moody's Investors Service this week downgraded the outlook on the UK's AAA ratings to 'negative', citing increased uncertainty regarding the pace of fiscal consolidation due to materially weaker growth prospects over the next few years.

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