With City economists increasingly convinced that the jobless total has passed its peak, John Major, the Prime Minister, hailed the fall as 'clear evidence of a recovery gathering pace'. Norman Lamont, sacked as Chancellor seven weeks ago, sarcastically congratulated his successor on 'the rapid success of his policies'.
The total fell by 7,600 last month, adjusted for the large seasonal fall that usually takes place in June. The Department of Employment cautiously estimated that the jobless total was falling at a trend rate of about 10,000 a month. Officials said they were much more confident that the total had turned round and denied again that Employment Service staff were pushing people on to other benefits to reduce the count.
Unemployment has fallen by 83,100 since January, leaving 10.4 per cent of the workforce without a job and claiming benefit. Since January, the jobless total has fallen in all parts of the UK except the North.
But the falls have been concentrated where the jobless total was lowest to start with. The fall since January has been twice as large in regions with unemployment below the national average as in above-average regions. That suggests that the 'north-south divide' - so contentious in the 1980s - is reopening.
The number of vacancies notified to JobCentres - and the number of people filling them - rose sharply in June, suggesting that the jobs market is picking up. But recent falls in unemployment are more the result of a shrinking workforce than companies taking on new employees. May saw 15,000 factory jobs shed, following 13,000 in April. Manufacturers have boosted production by offering more overtime and a longer working week.
Unemployment is falling more quickly than after the last recession, in part because the population of working age is rising less quickly. The number of people reaching school-leaving age each year is a third lower than in the early 1980s, with more staying on in further education. Net emigration from Britain is also higher than in the early 1980s, although fewer people are retiring.
But some economists fear unemployment will soon rise again for a while, believing much of the recent fall is the result of excessive job-shedding late last year, which employers are having to reverse.
Ian Shepherdson, of the City firm Midland Global Markets, said there was a good chance unemployment would rise in July. He added that, after increasing for a couple of months, the jobless total was likely to be flat before falling again next year.
Labour costs fall, page 23
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