Business World

Friday 24 March 2017

Unemployment rate in UK rises for the first time in over two years

Britain's Chancellor George Osborne is the target of protester's ire at a protest against the UK government's RBS shares sell-off.
Britain's Chancellor George Osborne is the target of protester's ire at a protest against the UK government's RBS shares sell-off.
Colm Kelpie

Colm Kelpie

The unemployment rate in the UK has risen for the first time in more than two years.

Britain's Office for National Statistics (ONS) said the jobless rate edged upward fractionally to 5.6pc in the three months to May, as the number of people in work fell by 67,000, due largely to the fact that there were fewer part-time workers.

It is the first time that the unemployment rate has risen since the start of 2013.

"It is possible that the rate of improvement in the labour market that we have seen over the last three years may have eased off, though it is much too early to be certain," Nick Palmer, an ONS statistician, said.

The unemployment rate in the UK still compares favourably to the rate here, which, although steadily falling, is higher at 9.7pc in July.

Economists had expected the rate to remain stable at 5.5pc. Sterling initially fell by about half a cent against the dollar.

Earnings in the UK, however, remain on the up, which could mean the Bank of England will continue to signal that an interest rate hike is approaching.

Total average weekly earnings in the three months to May, including bonuses, rose by 3.2pc compared with the same period a year earlier, up from 2.7pc in the three months to April.

It was the biggest increase in total pay over a three-month period since April 2010, the ONS said.

Excluding bonuses, pay rose by 2.8pc, the biggest increase in more than six years.

The Bank of England is keeping a close eye on wages as it considers when to start raising interest rates from their record low of 0.5pc.

Separate data from the Eurozone showed that industrial production in the single currency zone ended the first half of the year in negative fashion, with output dropping by more than expected. Weaker performances were recorded in the core economies of Germany, France and Italy, but Ireland was among the top three countries with the largest falls in industrial production in June on a month-on-month basis of 2pc.

But it recorded the highest annual increase of 27.6pc.

Output in the 19-member currency area slumped by 0.4pc in June compared with May, and dropped 0.2pc in the European Union as a whole.

The 0.4pc fall was worse than the 0.2pc recorded for the Eurozone in May, which was revised upwards. Industrial production fell 0.9pc in Germany in June compared with the previous month, by 1.1pc in Italy and by 0.2pc in France.

In Finland, the Netherlands, Slovakia and Spain industrial production in June was stronger than in May. While services are the largest contributor to growth in the Eurozone, industrial production is very important because of its large indirect impact on other sectors.

The largest fall in output came for factories in the durable consumer goods and capital goods sector. Energy recovered from a series to falls in previous months to become the most improved sector.

First estimates of economic growth in the Eurozone are due tomorrow. (Additional reporting Reuters)

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