Further falls predicted for jobless count
OFFICIAL data out on Wednesday is expected to show that fewer Britons claimed jobless benefits in June, the fifth successive monthly drop in the claimant count measure.
Economists, on average, expect the number of Britons claiming Job Seeker’s Allowance (JSA) will have fallen by 24,5000 last month. For the wider International Labor Organisation (ILO) measure, the consensus is for a 30,000 drop in the three months to May. This would take headline unemployment down to 2.47m and at a rate of 7.9 per cent.
The data is also likely to show that employment rose modestly in the three months to May. However, IHS Global Insight’s Howard Archer said that this is likely to be mainly due to an increase in the number of part-time workers outstripping still-falling full-time employment.
But analysts warn that the looming fiscal squeeze means that the tentative recovery in the labour market could be derailed. The Office for Budget Responsibility (OBR) said there would be 499,000 public sector job losses by 2014-15 as a consequence of the measures taken in the Budget.
Some estimates are much higher. Capital Economics reckons that 750,000 jobs could be lost over the next five years. This is similar to the OBR’s forecasts ahead of the Budget.
And with private sector firms still struggling and cautious about the recovery, it remains to be seen whether hiring in the private sector will fully offset the impending job losses in the public sector.
Meanwhile, economists expect that underlying wage growth will have remained muted, reflecting relatively high unemployment, workers’ job insecurity and the ongoing need for companies to limit their costs in a still challenging environment.
Investec’s Philip Shaw said: “We are forecasting a moderation in headline earnings growth to 2.8 per cent as the bonus effect wanes.”