Jobs up, but pay rises still lower than inflation

The jobs market managed to eke out some modest growth in the three months to April, but the unemployment rate remains well above pre-crisis levels and pay growth is still weak, according to official figures.

The number of people in employment rose by 24,000 over the period to 29.76 million and the numbers out of work fell by 5,000 to 2.51 million. But the official unemployment rate remained fixed at 7.8 per cent. The Office for National Statistics (ONS) also reported that the number of people claiming the dole fell by 8,600 in May to 1.51 million.

There was a slight improvement in pay growth over the period, although workers' remuneration is still running well below the annual rate of inflation. Total pay was up 1.3 per cent over the same three months of 2012. The most recent CPI inflation figures showed a 2.4 per cent annual increase in the cost of living in April. The pay growth was likely to reflect some workers' opting to defer bonuses from the 2012/13 tax year in order to take advantage in the fall in the top rate of tax in April.

Some City of London analysts described the figures as "encouraging" and said that they reflected the general improvement seen in the economy since the beginning of the year. "Coupled with recent better business survey figures and rising consumer and business confidence it suggests we should be looking for a positive GDP figure for the second quarter of 2013," James Knightley of ING said.

But others cautioned that weak pay growth would be likely to continue to hold back growth.

"Further falls in real pay look likely for the next year or so, suggesting that it will be a struggle for any consumer recovery to gain traction," Vicky Redwood of Capital Economics said.

The ONS also released its single-month estimates for the jobs market in April, which are not officially designated as national statistics because they are based on a smaller sample than the full survey. These suggested that unemployment rose by 219,000 and that employment fell by 120,000.

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