Wage worries offset fall in jobless as City bets interest rates will stay low

 

The steepest fall in youth unemployment since records began offered welcome news for the recovery yesterday as the Bank of England gave a strong hint that interest rates would stay on hold at record lows into next year.

Overall unemployment fell by 132,0000 to 2.08 million in the three months to June, the lowest since January 2009, taking the jobless rate down to 6.4 per cent. The main driver behind the fall was a 102,000 decline in unemployment among 16 to 24-year-olds to 767,000 over the period – the biggest since the Office for National Statistics began collecting figures in 1992. Youth unemployment is now 206,0009 lower than a year ago, which is also a record.

But the ONS also revealed lingering pay pain for British workers as average earnings also grew at a rate of just 0.6 per cent – another record low and less than a third of the current 1.9 per cent inflation rate. The figures came as the Bank’s Governor, Mark Carney, stressed that rate-setters would be placing emphasis on wages amid uncertainty over the amount of slack in the jobs market, encouraging a sell-off of the pound which pushed the currency to five-month lows against the dollar.

The record fall in youth unemployment takes the rate to 16.9 per cent, less than three years after the jobless rate among 16 to 24-year-olds soared above the 1 million mark in November 2011.

But John Cridland, the CBI director-general, called for a countrywide network of “Back to Work Coordinators” to speed up the flow of young people into the jobs market.

He said: “The latest figures are very upbeat, but we cannot ignore the fact that far too many young people are still out of work. Youth unemployment was rising even in the good times and is still high enough to fill Wembley Stadium more than eight times.

“We cannot squander the talent of a generation … Young people should be equipped with the skills they need to succeed and given the chance to show what they’re made of.”

The figures cover a quarter in which the UK economy finally reclaimed the ground lost to the financial crisis, six years after the beginning of the recession. The UK’s overall workforce swelled by 167,000 to 30.6 million over the period, and the number of Jobseeker’s Allowance claimants is on course to fall below a million next month for the first time since September 2008, after sliding by 33,600 to 1.01 million last month.

The strong recovery in the jobs market prompted the Bank to cut its forecast for unemployment sharply to 5.9 per cent this year, although the low growth in wages also means it now believes the economy can sustain a lower rate of unemployment than previously thought without fuelling inflation. Mr Carney said the economy was now taking on a “semblance of normality” but also warned of heightened geopolitical risks such as the crisis in Ukraine. A strong pound meanwhile means the Bank forecasts lower inflation in two years’ time – another dovish signal on the likely path of interest rates.

Sam Hill, the senior UK economist at RBC Capital Markets, said: “A hike before the end of 2014 is feasible but given the developments on the inflation forecast the clear signal from today’s report is that the odds of a move before the end of 2014 have reduced further.”

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
health
News
Fans take a selfie with Ed Miliband in Kempston, near Bedford, on Tuesday
election 2015
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
News
Chuck Norris pictured in 1996
people
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power