U.K. Jobless Claims Drop by Most Since 1997 ift.tt/H0ZoW6 The U.K. unemployment rate remained at 7.7 percent in the three months through August while jobless claims dropped the most in 16 years amid signs that the labor market is improving. The jobless rate as measured by International Labour Organisation standards was unchanged from the quarter through July, the Office for National Statistics in London said today. That was in line with the median of 31 economist forecasts in a Bloomberg News survey. In September, jobless claims fell 41,700, more than economists forecast and the most since June 1997. The data may reinforce investor speculation that unemployment will fall toward the level that could lead to a Bank of England interest-rate increase faster than policy makers forecast. The Monetary Policy Committee has said it wont raise its key interest rate until joblessness falls to 7 percent, something it expects to happen in 2016. We expect labor market data to show on-going improvement as a consequence of recent stronger economic activity and markedly improved business confidence, Howard Archer, an economist at IHS Global Insight in London, said before the data were released. We expect unemployment to head down steadily over the coming months, although the rate of decline will likely limited by rising productivity. The pound eased after the report and was trading at $1.6011 as of 9:34 a.m. London time, up 0.1 percent on the day. The 10-year government bond yield was little changed at 2.81 percent. Unemployment fell by 18,000 to 2.49 million people in the three months through August. Employment rose 155,000 to a record 29.9 million. Claims Fall Septembers drop in jobless claims was the 11th in succession and exceeded the median forecast of 27 economists in a Bloomberg News Survey for a fall of 25,000. In August, jobless claims 41,600 instead of the 32,600 drop initially estimated. The claimant count fell to 1.35 million last month, taking the rate to 4 percent. Both the level and the rate were the lowest since January 2009. After growing 0.7 percent in the three months through June, business surveys published by Markit Economics showed factory, services and construction output continued to expand in the third quarter. In services, which accounts for about three quarters of the economy, employment grew at close to its fastest pace in six years in September. Since Carney introduced forward guidance on Aug. 7, short-sterling futures have fallen as investors added to bets on a BOE rate increase from the current record-low 0.5 percent. The implied yield on the contract expiring in December 2014 was at 0.9 percent yesterday, up from 0.68 percent on Aug. 1. Rate Bets A Bloomberg survey published last week showed 21 of 34 respondents saw the jobless rate reaching the threshold by the end of 2015. Five of those predict it happening late next year. The debate over how fast unemployment will fall centers on productivity. The Bank of England reckons that companies will meet recovering demand from existing workers before they begin to hire, meaning unemployment will fall only gradually. Todays ONS report showed that pay growth slowed to 0.7 percent in the three months through August from 1.2 percent, highlighting the pressure on living standards as inflation runs at 2.7 percent. Public-sector pay fell 0.5 percent, the first decline since comparable records began in 2001. Excluding bonuses, pay growth slowed to 0.8 percent in the quarter through August, down from 1 percent in July and matching the record low posted in March, the ONS said. Figures produced on an experimental basis show the ILO jobless rate climbed to 8 percent in August from 7.7 percent in July. The ONS says the single-month data are volatile and should be treated with caution because hey are based on a more restricted sample than the quarterly figures. To contact the reporter on this story: Scott Hamilton in London at [email protected]; To contact the editor responsible for this story: Craig Stirling at [email protected] Enlarge image
Posted on: Wed, 16 Oct 2013 09:32:44 +0000
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