Bank rates pledge puts jobs in spotlight

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The Independent Online

The spotlight will fall on Britain's jobs market this week as the Bank of England's forward guidance on interest rates invests official unemployment figures with new significance.

New Governor Mark Carney is pledging to keep interest rates at a rock-bottom 0.5 per cent as long as the jobless rate remains above 7 per cent.

Under its latest economic forecasts the Bank does not expect this target to be hit until the second half of 2016. Wednesday's Office for National Statistics data are likely to show a 15,000 fall in jobseeker's allowance claimants in July.

However, the wider measure of unemployment is expected to be unchanged at around 2.5 million in the quarter to June, leaving the Bank's new benchmark unchanged at 7.8 per cent.

Capital Economics economist Samuel Tombs said: "Employment surveys have picked up in the last few months so we'll be looking to see further falls in the claimant count.

"But rising employment doesn't necessarily translate into a falling unemployment rate because the size of the workforce has grown and many older workers are delaying their retirement to work longer," he added.

This week's figures will also underline the ongoing squeeze on employees' pay packets despite better recent news on the wider economy.

The Consumer Prices Index inflation benchmark is likely to have eased to 2.8 per cent from 2.9 per cent in July but annual wage growth will be lingering close to record lows at 1.1 per cent, economists expect.