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
News
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Sport
sportSo, how closely were you paying attention during 2014?
Arts and Entertainment
Dennis speaks to his French teacher
tvThe Boy in the Dress, TV review
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect