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U.K. Jobless Claims Drop Unexpectedly, Employment At Record High

U.K. Jobless Claims Drop Unexpectedly, Employment At Record High
12/12/2012 6:35 AM ET

U.K. claimant count declined unexpectedly in November and employment reached a record through the three months to October, confounding the weakness in economic activity.

Claimant count dropped by 3,000 month-on-month to 1.58 million in November, the Office for National Statistics said Wednesday. Economists had forecast the figure to rise by 7,000. Claims rose by 6,000 in October, instead of the initially reported 10,100.

At the same time, the claimant count rate held steady at 4.8 percent, as widely expected for November.

Suggesting resilience in the labor market, the number of people out of work declined sharply, while employment increased during the three months ended October.

During the three-month period, there were 2.51 million unemployed people, down 82,000 from May to July, marking the biggest fall since 2001. The jobless rate held at 7.8 percent, matching economists' expectations.

The number of people in work totaled 29.601 million, up 40,000 from the May to July period. The U.K. saw the highest number of people in job since records began in 1971.

According to the Report on Jobs from Recruitment and Employment Confederation and KPMG, permanent placements in the U.K. increased at the fastest pace for 19 months in November. There was also a faster growth in job vacancies due to strong demand from private sector employers.

However, IHS Global Insight's Chief UK economist Howard Archer said there is a real danger that the increase in employment in private sector will not be enough to offset job cuts in the public sector and combat the increasing labor force.

Consequently, Archer said unemployment could trend up gradually to a peak of 2.65 million in late-2013/early-2014, giving an unemployment rate of 8.2 percent.

Moreover, the ONS data showed that total pay including bonus rose only 1.8 percent during three months to October from the corresponding period of last year. At the same time, regular pay, excluding bonuses climbed 1.7 percent.

Consumer price inflation at 2.7 percent in October indicates that real pay fall short to meet rising prices.

by RTT Staff Writer

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