U.K. Unemployment Rises Least in a Year as Slump Ebbs
U.K. unemployment rose by the least in a year and fewer people signed on for jobless benefits than economists forecast as the recession eased.
The number of people seeking work in the three months through August rose by 88,000, the smallest increase since the quarter through July 2008, the Office for National Statistics said in London today. Claims for jobless benefits rose by 20,800 in September, less than the 24,500 median forecast in a Bloomberg News survey of 28 economists.
Prime Minister Gordon Brown is trying to revive the economy in time for an election due by June 2010 as opinion polls show his Labour Party trailing the opposition Conservatives. Gross domestic product, which has dropped for five quarters, may have stopped shrinking during the three months through September, curbing job losses.
“The slower rise is welcome but I wouldn’t get too excited,” said Colin Ellis, an economist at Daiwa Securities SMBC and a former central bank official. “I still think we will see unemployment going through 3 million next year.”
The pound extended gains against the dollar after the report. The U.K. currency traded at $1.6005 as of 10:11 a.m. in London, from $1.5925 yesterday.
The unemployment rate in the three months through August as measured by International Labour Organisation standards was 7.9 percent, the statistics office said. That compares with 9.6 percent in the euro region, 9.8 percent in the U.S. and 5.5 percent in Japan.
Job Cuts
Alliance & Leicester, a unit of Banco Santander SA, announced the closure of its Heritage House site and the loss of 200 jobs across two Leicester sites in England, the Communication Workers Union said yesterday in a statement.
Overall unemployment was 2.47 million in the quarter through August, a drop of 1,000 from the three months through July. The total claimant count rose to 1.63 million in September, the highest since April 1997.
Labour advanced in a survey by Populus Ltd. after ministers attacked bankers and the rich, narrowing the Conservatives’ lead over the government. Labour had the support of 30 percent of voters compared with 40 percent for the opposition, according to the survey for the London-based Times conducted from Oct. 9 to Oct. 11.
‘Significant Slowing’
“We’re seeing a significant slowing in the rate of increase of unemployment,” Employment minister Jim Knight said on Sky News. “We expect it to continue to rise for some months yet. That’s why we need to continue spending. If we choke off that investment as the Conservatives are proposing could make that level rise to 5 million. We should be borrowing now to invest to make sure we move to growth. It’s a big problem for young people.”
The U.K. economy shrank 0.6 percent in the second quarter, less than previously estimated, and the National Institute of Economics and Social Research said last week gross domestic product stopped falling in the three months through September.
Signs of recovery are allowing some companies to limit job losses. General Motors Co.’s U.K.-based Vauxhall unit, which employs more than 5,000 people, will suffer no compulsory job losses following its planned takeover by Magna International Inc. of Canada, the Unite union said yesterday.
Average earnings excluding bonuses grew an annual 1.9 percent in the quarter through August, the lowest since at least 2001, the statistics office said. Including bonuses, they increased by 1.6 percent.