Unemployment rises for second month running

Unemployment has risen two months in a row for the first time since the UK was emerging from the last recession in December 1992.

Unemployment has risen two months in a row for the first time since the UK was emerging from the last recession in December 1992.

The number of people out of work and claiming benefit climbed 4,800 to 959,100 last month, taking the unemployment rate to 3.2 per cent. October's rise was revised up to 7,500.

Using the Government's preferred measure, the total number of people seeking work, unemployment was up 29,000 in the three months to October, to 1.52 million. The figure has risen by 67,000 since bottoming in April.

Economists had expected the figures to be worse, but forecast the claimant count would continue to rise as employers continued to shed workers in response to the global economic slowdown. Continued announcements of hefty lay-offs pose a threat to confidence and consumer spending, which have held up well to date as Britain has coped with the global economic slowdown better than other European countries and unemployment remains at a 25-year low.

The lay-offs continued yesterday. Fujitsu, the Japanese electronics giant, said it was looking to cut 1,500 jobs, or 13 per cent of the workforce, at its UK subsidiary ICL. A voluntary redundancy programme was being put in place, the company said, and the cuts would be completed by March.

On Tuesday Consignia, the renamed Post Office, said it would shed some 30,000 staff, while NTL, the telecoms company, outlined 4,000 job cuts on Monday. Employment in the UK manufacturing sector now sits at a record low of 3.79 million.

Simon Rubinsohn, the chief economist at Gerrard, said the brunt of the job losses to date has been borne by part-time, young or old employees. "Natural wastage appears to be the first recourse of companies seeking to implement lay-offs. There is still a reluctance on the part of employers to shed labour in a major way."

However, Mr Rubinsohn warned that the gradual impact of the more recent job loss announcements could have a pronounced impact on sentiment next year.

Separately, average earnings rose 4.4 per cent in the three months to October, slightly up from the quarterly rate of 4.3 per cent recorded in September. Service sector earnings growth accelerated slightly to 4.2 per cent, while public sector wage inflation suffered a modest deceleration to 5.7 per cent. Pay in the manufacturing industry was up 4.3 per cent in the period.