Recovery in jobs gives a fillip before the news on growth
Number in work hits a record high but there are warnings of 'shaky foundations'
Wednesday 23 January 2013
A stunning jobs recovery has pushed UK employment to a record high of almost 30 million, giving Chancellor George Osborne a timely boost ahead of potentially dire news on growth.
In the three months to November there were 29.68 million people in work, a 90,000 rise on the previous quarter, according to the Office for National Statistics.
It was also more than half a million higher than a year earlier and took the employment rate to 71.4 per cent, the highest since official records began in 1971. The more timely measure of jobseeker's allowance claimants also showed a surprise 12,100 fall in December, far better than the City feared.
Unemployment dipped 37,000 to fall below 2.5 million for the first time in almost two years. The figures come despite poorer news on jobs with the collapse of retailers such as HMV, Jessops, Blockbuster and Comet potentially putting more than 10,000 jobs at risk.
They also deepen the productivity puzzle confounding the Bank of England and economists alike with the ONS set to unveil a 0.1 per cent decline for the overall economy between October and December, marking the fourth quarter of economic contraction in the past five and raising the threat of an unprecedented triple-dip recession.
The IMF sounded a note of caution as it trimmed its UK growth forecasts by 0.1 per cent to 1 per cent this year. It expects the economy to grow 1.9 per cent in 2014, 0.3 percentage points down on its October forecast. The jobs figures showed a 23,000 fall in part-time employment, more than offset by a huge 113,000 increase in the numbers employed full time in the quarter months to November. A modest rise in youth unemployment to 957,000 and a rise in long-term unemployment were the only blots on the figures.
Employment Minister Mark Hoban said unemployment was lower than when the Coalition took office, although shadow work and pensions secretary Liam Byrne said the jobs recovery was built on "shaky foundations".
He added: "There are now more people on the dole long term than at any time since October 1997, there are more signing on for over two years than at any time since the '90s and there are now more people in temporary jobs than at any time since July 2001."
Millions of workers are also worse off in real terms as wages grow by 1.5 per cent, well below the 2.7 per cent inflation rate, the figures showed. Neil Carberry, CBI director for employment and skills, said: "Pay restraint has played an important role in preserving jobs and, with growth in average weekly earnings remaining subdued, it's clear that this is a trend that continues."
HSBC economist John Zhu warned: "But if demand remains weak, firms could finally collapse or shed labour. The resilience of the labour market could evaporate."
The Bank of England ruled out an imminent return to the printing presses in the minutes of its latest policy meeting.
The monetary policy committee, which has pumped £375bn into a floundering recovery since March 2009, highlighted positives such as the aversion of the fiscal cliff in the United States and the stabilisation of the eurozone, which "strengthened the belief of some of these members that no further asset purchases were required at the current juncture".
The MPC was also encouraged as the Funding for Lending scheme gained traction in improving credit conditions.
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