Times Online August 16, 2006

Unemployment hits six-year high


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Unemployment in the UK is running at its highest rate for over six years, even though the total number employed in the country has struck a new record, official figures showed today.

The office for National Statistics said that the broad International Labour Organisation measure of unemployment in the three months to June rose by 92,000 from the previous three months, to 1.677 million.

The figure is the highest since the 1.682 million recorded in February 2000. The quarterly increase was higher than expectations for a 78,000 rise.

As a result, the jobless rate rose 0.3 percentage points from the previous three months to 5.5 per cent, its highest level since June 2000, when it was also 5.5 per cent.

Over the past year, the rate has gone up 0.7 percentage points.

The statistics office said the number of Britons claiming jobseeker’s allowance rose to a four-and-a-half year high during July and is slowly nearing the politically-sensitive 1 million mark for the first time since January 2001.

Total employment levels rose by 42,000 over the quarter and by 240,000 from the same period a year ago, taking the overall figure to 28.94 million, the highest figure since records began in 1971.

However the claimant count in July rose by 2,000 from June to 957,000 its highest level since January 2002, when it stood at 958,200.

The rise was the the sixth in a row and means the claimant count has now risen for 16 of the last 17 months. The increase was slightly lower than the 5,000 predicted by analysts.

In June, the claimant count rose by 4,300, downwardly revised from the original estimate of 5,600.

Over the past 12 months, the claimant count has risen by 90,900. The claimant count rate for July was 3 per cent of the workforce for the fifth month in a row.

The rate was last higher in September 2002, when it stood at 3.1 per cent.

Elsewhere, the survey found wage pressures creeping up slightly during June.

The statistics office revealed that headline average earnings, including bonuses, rose by a 4.3 per cent annual pace in the three months to June, up from 4.1 per cent in the three months to May.

The spike up in headline earnings took the rate to its highest level since the 4.4 per cent pace recorded in April 2005.

In its Inflation Report last week, the Bank of England indicated that there were very few signs that past increases in energy prices have fuelled pay pressures across the economy. 

The Monetary Policy Committee has said it would get particularly concerned if average earnings rise by 4.5 per cent or more.