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UK unemployment falls to 7.4%

UK unemployment fell to 7.4 per cent between August and October compared to 7.7 per cent for the previous three months, data from the Office for National Statistics shows.

This rate is the lowest seen since the February-to-April period of 2009.

The number of unemployed fell by 99,000 between August and October, with the number of people out of work standing at 2.39 million.

The positive figures follow huge Office for Budget Responsibility upgrades to growth forecasts, compared to March estimates, up from 0.6 per cent this year to 1.4 per cent.

The OBR also revised its March estimates for growth next year upwards from 1.8 per cent to  2.4 per cent.

Today’s figures show there were an extra 250,000 people in work than the previous three months, topping 30 million for the first time.

Comparing August to October 2013 with a year earlier, there were 485,000 more people in employment, and 121,000 fewer unemployed people.

Total pay rose by 0.9 per cent compared with August to October 2012. Regular pay rose by 0.8 per cent over the same period.

The improving unemployment figures are closing in on the Bank of England’s 7 per cent threshold when it will consider interest rate rises.

Bank of England Governor Mark Carney has tried to calm consumer fears over rate rises by insisting it is a “threshold not a trigger”.

Capital Economics UK economist Samuel Tombs says: “The latest UK labour market figures will add to doubts over the MPC’s view that the unemployment rate will take about another two years to fall to the 7 per cent threshold.

“Nonetheless, the minutes of December’s MPC meeting provide more evidence that the Committee is unlikely to raise interest rates as soon as the unemployment rate reaches 7 per cent. In particular, the minutes noted that the recent strengthening of the pound meant that inflation was probably on course to dip below the 2 per cent target in the second half of 2014.

“So even if the economic recovery continues to bring the unemployment rate down rapidly, the benign inflation outlook will enable the MPC to keep interest rates on hold for a long time yet.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. I wonder how many of these so called jobs are real jobs where they are paid a proper wage, on a permanent contract and have all the rights of full time employees? Or, are these temporary part time jobs with no hope of full time employment? I think that is what you would call a rhetorical question.

  2. The Cynical Broker 18th December 2013 at 12:13 pm

    Some good questions Mr Watkin! There are over 1 million people in part time work who want full time employment, many of whom are surviving only due to the low interest rate environment. Also it would be interesting to find out how many of those who lost their jobs in the public sector, are earning as much in the private sector? Then throw in the fact that excluding bonuses, pay grew by just 0.8% compared to Q3 of 2012, and only an idiot would expect a rate rise when the unemployment rate hits 7%!

    The recovery (if we can call it that) is being conmsumer led purely as people are spending more and saving less as they’re feeling more confdent, while the housing market is being driven by the increases First time buyers, cash buyers and Buy To Let landlords. According to the CML just 3% of second steppers have moved since 2009. This is hardly a recipe for long term sustainable growth ?

  3. Matthew Barsauckas 18th December 2013 at 3:55 pm

    Yip, do not disagree with any of that.

    There are millions of UK home owner’s now watching that “Ticking Clock” that the BOE’s Mr Carney has set up.

    Gripped by the BBC or SKY News countdowns for the declining employment figures reducing each quarter by 0.x/mth.

    And all waiting to see what actually happens sub 7.0%. Statistic tell us that we will be in for an up and down ride with this up until the next election.

    Beyond that date you can be guaranteed that the real financial pain will begin, because in terms of UK PLC debt, current fiscal actions have been like attacking a Polaris Submarine with a Sword !

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