Unemployment Falls in UK

Unemployment in the United Kingdom economy has declined over the second quarter of this year, according to official figures released today.

Unemployment figures, measured in terms of claimants of state unemployment benefit, have shown a consistent downward trend of late, reflecting increasing job opportunities for those previously reliant on government hand outs.

The figures, released by the Office for National Statistics, highlighted a fall over 45,000 in unemployment figures for the period ended June, taking the overall unemployment figure to 1.65 million.

Whilst the number of unemployed workers was down, average salaries increased by just 3.3% over the period, highlighting the lack of inflationary pressures within the economy from another angle.

The low wage inflation of the second quarter sets a record slow growth since 2003, highlighting yet again the impact of successive interest rate rises on the buoyant UK economy.

Analysts have predicted that today’s figures could be used as further reassurance of maintaining interest rates at 5.75% for another month.

With inflation apparently under wraps, analysts have gone from predicting a certain rise in rates to seeing any move as highly unlikely.

Redundancy has also fallen to the lowest level since 1995, showing just 4.8 per thousand employees losing their jobs over the second quarter of the year.

With earnings rising at a slower pace than in recent years, and inflation seemingly under control, the Bank of England look unlikely to take any immediate steps towards interest rate increases.

Analyst David Page, of Investec, believes the slow earnings inflation could actually play a factor in the overall lack of threat from inflation.

“Wage inflation is just not adding to medium-term inflation risks at present. In fact, we wonder if there’s a potential problem of soft wage growth undermining household spending.”

The Bank of England are set to meet in the next few weeks to discuss interest policy for next month, where they are widely expected to maintain 5.75%.

Story link: Unemployment Falls in UK