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UK Employment - Not Yet Party Time

UK Employment - Not Yet Party Time

Says Joshua Raymond, chief marketing executive of Cityindex.co.uk. “The UK labour market data released by the Office of National Statistics yesterday is excellent news indeed for the UK’s economy though it’s always positive when the economy experiences growth, the signs are pointing to the fact that the job market is on the mend and that is something that we can all get behind.

“According to the statistics the rate of unemployment has fallen from 7.8% over the last three months, to 7.7%. On paper this doesn’t sound like much, but bearing in mind that a) this is somewhat unexpected – as we stated yesterday before the data was released the figure was expected to remain static – and b) the governor of the Bank of England, Mark Carney has publicly stated that interest rates will almost certainly not be raised until the rate falls to 7% and below this means that we’re definitely trending in the right direction, and we could see this happening much sooner than the Bank of England has forecast.

“There’s further evidence of a brightening UK economy too, as jobless benefit claims fell much further than expected, with 32,600 less claims from May to July.  Jobseeker’s Allowance claims are now at 1.402 million the lowest level in over four years. This could look very positive for the Coalition Government, with claims of the main out of work benefits down by more than 400,000 since the election.

“Before we start celebrating a victory for the people, though, the statistics highlighted a couple of persistent problems experienced by those lucky enough to be finding work. The number of people said to be working part-time because they are unable to find a full-time job has risen to 1.45 million: the highest this figure has ever been, and double the number reported five years ago. Even so, much of the growth has been driven by the increase in numbers taking on full-time jobs. Job vacancies, too, hit a six year high last month, which certainly seems to show that the job market has turned the corner.

“An addition to this, though, wage growth remains significantly below the rate of inflation, which constitutes arguably the biggest threat to the power of the consumer and UK retailers, and may be one of the more substantial factors impeding the growth of the economy overall.

“We should also be mindful of the fact that the UK unemployment rate has been at 7.7% three times previously during the last three years before rising back to 7.9%. So while the jobless data is good news, we should not be getting the party balloons out just yet.

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