Unemployment rises in the UK for the first time in two years

http://www.independent.co.uk/news/business/news/unemployment-rises-in-the-uk-for-the-first-time-in-two-years-10392126.html

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The number of jobs in the UK economy has fallen and unemployment has gone up for the first time in two years – but labour market analysts insisted this is likely to represent a temporary blip rather than a derailing of the British recovery.

Official figures for the three months to May showed 30.98 million people in work, 67,000 down on the previous three months and the first quarterly fall since April 2013. Meanwhile, the number of people out of work increased by 15,000 to 1.85 million, representing the first quarterly increase since March 2013. The overall unemployment rate also ticked up from 5.5 per cent to 5.6 per cent.

“These figures should not prove cause for concern,” said Ben Brettell, the senior economist of senior Hargreaves Lansdown. “The pace of job creation has been expected to slow for some time, and the magnitude of [the] rise in unemployment is extremely small.” Alan Monks of JP Morgan said: “We do not think firms have entered a phase of material job shedding, as business surveys of confidence and intentions do not support this view.”

The Office for National Statistics itself was also keen to downplay talk of a deterioration. “It’s possible that the rate of improvement in the labour market that we have seen over the last three years may have eased off, though it is much too early to be certain,” said the ONS’s statistician John Palmer.

Andrew Hunter, the co-founder of the job search website Adzuna, said the labour market slowdown seemed to have been caused by redundancy announcements from some large organisations including Rolls-Royce and the BBC and also by the general economic uncertainty created by May’s general election.

“The forward-looking data for June and July suggests a bounce back in recruitment, which will no doubt lead to unemployment falling again over the summer,” he said.

The ONS data on wage growth was also weaker than many expected. Average earnings, excluding bonuses, were up 3.2 per cent year on year, slightly weaker than the 3.3 per cent predicted by analysts. Some argued that rate of average pay growth, which remains still well below pre-2008 levels, means the Bank of England is likely to hold off until next year before putting up interest rates for the first time since 2009.

“Today’s looser set of labour market data does present a decent case to keep policy on a wait-and-see footing for a while longer,” said Philip Shaw of Investec.

Jonathan Portes, the director of the National Institute of Economic and Social Research, said the latest jobs report suggested there are “some indications we may have reached the limits of significant further increases in the employment rate”.

He added: “In some ways that is bad news, because jobs growth has been the single biggest success story of the British economy. [But ] the upside one might hope would be wage growth.”