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.”

News
The cartoon produced by Bruce MacKinnon for the Halifax Chronicle-Herald on Thursday, showing the bronze soldiers of the war memorial in Ottawa welcoming Corporal Cirillo into their midst
news
Voices
Funds raised from the sale of poppies help the members of the armed forces with financial difficulties
voicesLindsey German: The best way of protecting soldiers is to stop sending them into disastrous conflicts
Voices
Nigel Farage has backed DJ Mike Read's new Ukip song
voicesNigel Farage: Where is the Left’s outrage over the sexual abuse of girls in the North of England?
Property
One bedroom terraced house for sale, Richmond Avenue, Islington, London N1. On with Winkworths for £275,000.
property
PROMOTED VIDEO
News
The Edge and his wife, Morleigh Steinberg, at the Academy Awards in 2014
peopleGuitarist faces protests over plan to build mansions in Malibu
News
i100
News
peopleFox presenter gives her less than favourable view of women in politics
News
Mario Balotelli has been accused of 'threateningly' telling a woman to stop photographing his Ferrari
peoplePolice investigate claim Balotelli acted 'threateningly' towards a woman photographing his Ferrari
Arts and Entertainment
Paul Anderson plays Arthur Shelby in Peaky Blinders series two
tvReview: Arthur Shelby Jr seems to be losing his mind as his younger brother lets him run riot in London
Life and Style
The Zinger Double Down King, which is a bun-less burger released in Korea
food + drinkKFC unveils breadless meat beast
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
A shared vision: Cerys Matthews has been familiarising herself with Dylan Thomas’s material, for a revealing radio programme
arts + entsA singer, her uncle and a special relationship with Dylan Thomas
News
In other news ... Jon Snow performed at last year's Newsroom's Got Talent charity event
people
News
i100
Life and Style
Text messaging changes as a relationship evolves
life
News
The comedian, 42, made the controversial comment following the athlete’s sentencing to five years for the culpable homicide of Reeva Steenkamp on Tuesday
peopleComedian's quip about Reeva Steenkamp was less than well received at music magazine awards
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

SQL Developer with T-SQL, Watford, Hertfordshire - £350 - £360

£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...

Chief Financial Officer

120-150k: Accountancy Action: We are looking for an experienced CFO from a min...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?