The number of Britons claiming unemployment benefit unexpectedly fell in August by the largest amount since June 2010, data showed yesterday, raising hopes that Britain’s labour market is improving.
The National Statistics Office said the number of people claiming unemployment benefits last month was 1.57 million, down by 15,000 compared to July.
Furthermore, the number of jobless in the quarter to July fell by 7,000 to 2.59 million. The unemployment rate was 8.1 per cent.
Employment Minister Mark Hoban cautiously welcomed the latest figures telling BBC: “There are some positive and encouraging signs there, but there are also some challenges too,” citing the problem of youth unemployment.
“We’re not complacent about youth unemployment – we need to do more to get young people into work.”
James Knightley, from ING, said: “The UK labour market data once again provides a huge upside surprise. With business surveys, such as the PMIs, also having improved, this report again raises questions over the accuracy of the GDP numbers.
“Wage growth remains subdued although the basic pay part does appear to be picking up modestly while bonus payments appear to be falling back.
“With eurozone break-up fears fading and the US set to unveil further stimulus tomorrow, the hope is that we will start to see more optimism in the corporate sector on economic prospects, which can lead to a further strengthening of the UK’s jobs market.”
Philip Shaw, from Investec, remarked: “The August claimant count has shown an impressive fall after a similar revised decline in July. This might be specifically related to Olympic hiring; really the bigger picture is the same – namely that if anything unemployment is falling slightly while employment is rising, which demonstrates the resilience of the labour market against the economic background.
“At the same time, pay growth remains very subdued which is no surprise. Overall, not a great surprise from the labour market data as a whole.
“There is a question over whether the better than expected employment trend generally indicates a loss of productivity growth. Our view tends to be that is not the case, and that firms are hoarding labour and mitigating their costs by reducing pay growth.”