UK jobless figures show rise for first time in two years

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The Independent Online

Britain's unemployment record suffered a jolt yesterday as new figures revealed the first rise for two years in the number of people out of work and claiming benefit.

Britain's unemployment record suffered a jolt yesterday as new figures revealed the first rise for two years in the number of people out of work and claiming benefit.

The jobless total rose by 3,500 in October to stand at 1.047 million. This was the first rise since November 1998. An end to falling unemployment would come as a severe blow to the Government, which urged analysts yesterday not to read too much into one month's figures

There was more disappointing news from figures that showed a pick-up in average earnings growth. National Statistics, the government department which produced the figures, said the rise in unemployment could be a blip. "Unemployment is still falling but there is some evidence that the downward trend is less strong," said an NS statistician.

A sharp fall of 16,400 in the unemployment total in September was revised to a fall of just 7,900. Tessa Jowell, an Employment minister, said a slight rise in the claimant count was "not unusual". "Too much significance should not be placed on a single month's figures." She said the rise could be due to factors such as a return of young people to education and "perhaps some lingering effects of the recent difficulties over fuel". She pointed to further increases in the number in work to an all-time record of 28.0 million. The Government's preferred measure of unemployment fell 36,000 to 1.568 million, although this figure only covers up to September. Analysts said the issue for the Monetary Policy Committee when setting interest rates was whether the economy had reached full employment, which could in turn force up wages.

National Statistics said growth in average earnings levels rose to 4.1 per cent in September from 4.0 per cent in August - the first rise since February. David Blunkett, the Secretary of State for Education and Employment said: "If we are to make progress, it is important that we maintain wage stability."

John Butler, an economist at HSBC, an investment bank, said a rise in the jobless total could be a sign the economy was slowing, rather than running out of available workers.

He said hawks on the MPC such as Stephen Nickell, a labour market expert, would wait to see if the pay claims in early 2001 showed a rise. "If they don't it would suggest the structural changes in the labour market have gone further than the MPC has assumed," he said. "The discussion will turn to when rates will start falling."

Kate Barker, chief economist at the Confederation of British Industry, said the increase in the claimant count showed there was little inflationary pressure. "It confirms our view that the Bank's policy of leaving interest rates unchanged must continue," she said.

Gordon Brown, the Chancellor, said yesterday that earnings were still "in line with our inflation target", adding: "There are a million vacancies spread across the country." But despite the vacancies, there were signs employers could not find enough qualified staff. Almost two-thirds of UK company bosses are having difficulties recruiting skilled workers, the Institute of Directors said yesterday.

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