U.K. Jobless Claims Rise In Oct., Raising Worries Of A Setback In Q4

U.K. Jobless Claims Rise In Oct., Raising Worries Of A Setback In Q4

Unemployment data from the U.K. showed a rise in jobless claims in October to raise worries after the progress seen in last month's figures, thereby increasing speculations the economy would have a setback in the last quarter of the year.

Jobless claims showed a rise of 10.1 thousand, the fastest pace in more than a year, to 1.58 million, compared to estimates of no change and the previous reading of -4.0 thousands. Claimant count rate steadied at 4.8%.

On the other hand, ILO unemployment rate for the three months ended September dipped to 7.8%, recording a drop of 49,000 to 2.51 million, better than both prior and expected readings of 7.9%, whereas employment edged up 100,000 to 29.6 million.

The improvement seen recently in unemployment was largely attributable to the positive effect of the London Olympics which managed to create jobs in London, hence the amelioration may not continue over the coming months, especially as the most recent reports referred to a weakness in the economy's key sectors.

U.K. PMI manufacturing showed a widening contraction to 47.5 in October from a revised of 48.1 and services showed an ease in expansion to 50.6 in October from 52.2 in September.

Today's report also reflected the weakness in consumer spending average weekly earnings surged just 1.8% in the quarter through September from a year earlier after the prior 1.7% increase.

In the third quarter, U.K. growth rebounded strongly to record an expansion of 1.0%, the strongest growth in five years, leaving three consecutive quarters of contractions, yet it seems that the pick up in third quarter growth is largely an artefact of special events such as the Olympic Games and probably there will be a drop again, where jobless claims in London rose by 2,900 in October with the unwind of the effect of the Olympic Games.