Sharp fall in jobless rate signals pick-up in growth

Economy: Rise in average earnings sparks fears of renewed inflation

Unemployment fell by a much bigger margin than expected last month, providing a boost for the Government and another sign that underlying economic growth may be picking up.

But economists feared that upward revisions to average earnings figures were an indication of inflationary pressures in the pipeline, reducing the chances of further cuts in interest rates.

The seasonally adjusted jobless total dropped by 24,100 in July to 2,126,200, its lowest level since March 1991. The consensus forecast by City economists had been for a drop of around 14,000. The Office of National Statistics also said June's fall in unemployment at 16,000 was larger than the previous estimate of 14,300.

The unemployment rate last month was 7.6 per cent, though the male rate, at 10.3 per cent, compared with a rate for women of just 4.3 per cent. Government statisticians said July's fall, the largest since March, was out of line with the recent trend, with reductions in the coming months expected at around 15,000.

Figures for unfilled vacancies at job centres were also buoyant, rising by 11,500 to 230,300, the highest number since January 1989.

Kevin Darlington, UK economist at stockbrokers Hoare Govett, said: "Unemployment continues to trickle down faster than anticipated. These figures give the distinct sense that behind the scenes the economy is more buoyant than perhaps other statistics are suggesting."

John Monks, general secretary of the TUC, pointed to recent survey evidence showing a fall in the number of people employed. "The fall in claimant unemployment is welcome, but is not a reliable guide to what is really happening in the labour market. There is still no sign that the economy is generating more jobs."

The number of people out of work and claiming benefit in July fell in every region, though there were signs that the gap between north and south was opening up again. The biggest reduction was in the South-east, where the rate stood at 7.1 per cent. The lowest unemployment rate was in East Anglia, at 5.8 per cent, while in the North the jobless total stood at 9.7 per cent.

There was less good news for the Government in the average earnings figures. The surprise fall reported in underlying average earnings growth in May, from 3.75 per cent to 3.5 per cent, had been revised back upwards in the statistics published yesterday. The new estimate for May was 3.75 per cent, with the same figure for June.

Economists differed over the significance of the revision. Ciaran Barr, from Deutsche Morgan Grenfell, said: "By the end of next year I think you will see inflationary pressures really building up. Average earnings could rise as fast as 5 per cent."

Sport
Club legend Paul Scholes is scared United could disappear into 'the wilderness'
football
News
A model of a Neanderthal man on display at the National Museum of Prehistory in Dordogne, France
science
News
Dawkins: 'There’s a very interesting reason why a prince could not turn into a frog – it's statistically too improbable'
newsThat's Richard Dawkins on babies with Down Syndrome
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Travel
Dinosaurs Unleashed at the Eden Project
travel
Arts and Entertainment
music
Sport
football
Life and Style
This month marks the 20th anniversary of the first online sale
techDespite a host of other online auction sites and fierce competition from Amazon, eBay is still the most popular e-commerce site in the UK
News
i100
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

Quantitative Analyst (Financial Services, Graduate, SQL, VBA)

£45000 per annum: Harrington Starr: Quantitative Analyst (Financial Services, ...

Application Support Engineer (C++, .NET, VB, Perl, Bash, SQL)

Negotiable: Harrington Starr: Application Support Engineer (C++, .NET, VB, Per...

AIFMD Business Analyst / Consultant - Investment Management

£450 - £600 per day: Harrington Starr: AIFMD Business Analyst / Consultant - I...

Business Analyst Solvency II SME (Pillar 1, 2 & 3) Insurance

£450 - £600 per day: Harrington Starr: Business Analyst Solvency II SME (Pilla...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home