Jobs and pay data raise rate cut hopes
Thursday 17 June 1999
Following the steeper-than-expected decline in inflation reported earlier in the week, the combined good news on jobs and pay encouraged hopes that the Monetary Policy Committee will cut interest rates again. Other figures yesterday suggested the Government's borrowing is on track to meet the Budget target.
However, public-sector pay could test future government spending plans; it has accelerated since the election to reach nearly the same pace as private-sector wage growth, yesterday's figures showed.
The number of people claiming unemployment benefit fell by 6,500 to just under 1.3 million in May, leaving the jobless rate at 4.5 per cent. The number unemployed on the international definition fell by 23,000 in the three months to April to 1.8 million. A rise of 45,000 in the number in work took employment to a new record of 27.6 million in the same period. However, total hours worked declined slightly.
Despite the further improvement in unemployment, the year-on-year growth in average earnings slowed unexpectedly to 4.6 per cent from 4.8 per cent. Public-sector pay growth edged up to 4.2 per cent, but private sector increases slowed to 4.6 per cent from 5 per cent.
"It is very reassuring that the labour market is levelling off at a point where it is not an inflationary threat," said Leo Doyle, an economist at Dresdner Kleinwort Benson.
Andrew Smith, the employment minister, said the latest fall in the jobless total was partly down to the New Deal. "The New Deal for Young People is helping more people to join the active labour force and move into the world of work," he said. He emphasised the need for continuing wage restraint in both public and private sectors.
The news on jobs and pay encouraged those who believe there has been a permanent improvement in the labour market. Sir Alan Budd, who has just stepped down from the MPC, said this week he was prepared to believe policies had lowered the rate of unemployment below which inflation would take off.
Mr Doyle said: "The New Deal must be bringing more people into the jobs market, and there is no evidence the minimum wage is doing any harm."
Many economists expect unemployment to rise later this year, in reaction to the earlier slowdown in growth. But with growth now recovering again, the rise should be limited.
Manufacturing continued to shed jobs, with employment down by 50,000 in the three months to April. This helped boost productivity growth in the sector.
Separately, the Treasury reported a pounds 1.6bn public sector net cash requirement (PSNCR) in May, much lower than expected. Net borrowing was pounds 3.5bn. Although only the second month of the financial year, analysts said borrowing was on track.
Revenues, especially income tax receipts, grew strongly in the year to May. Government spending rose modestly after a surge at the end of last financial year.
- 1 If you're not already angry about the migrant crisis, here's a history lesson to remind you why you really should be
- 2 David De Gea: Manchester United goalkeeper's £29m move to Real Madrid off - because paperwork 'not done in time'
- 3 Pansexual: What is it - and when did the term gain popularity?
- 4 A Chinese journalist has appeared on state television 'confessing' to causing the stock market chaos
- 5 Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
Miley Cyrus calls out hypocrisy of women’s nipples being taboo
The man who sold Minecraft to Microsoft for £2.5 billion says it's made him miserable
Nazi 'gold train': Fire engulfs suspected location of vehicle in Poland
Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
Isis releases graphic video showing four Shia 'spies' being burned alive in Anbar, Iraq
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
UN investigating British Government over human rights abuses caused by IDS welfare reforms
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...