NEMPLOYMENT unexpectedly fell in November for the first time since February 2008, raising hopes that the economy emerged from recession in the fourth quarter.
Figures from the Office for National Statistics (ONS) revealed that the number of Britons claiming jobless benefits fell by 6,300 in November, confounding analyst expectations of a rise of 13,300. Adding to the good news was a significant downward revision to October’s figure to 5,900 jobs lost compared to an original estimate of 12,900.
Owen James, economist at the Centre for Economics and Business Research (CEBR), said the fall in the claimant count supports the view that the economy is likely to see strong growth in the fourth quarter.
“However, a weak first quarter of 2010 also looks likely as the rise in VAT, along with a stuttering global recovery, provide a rapid reminder that the recovery is unlikely to be smooth or rapid,” he added.
But the majority of City analysts still expect the jobless rate to continue rising well into 2010 – unemployment usually lags the recovery rather than precedes it.
The wider International Labour Organisation (ILO) measure posted a rise of 53,000 in the three months to October, keeping the unemployment rate at 7.9 per cent. Young people also continued to suffer with the jobless rate hitting 18.4 per cent, the highest since the series began in 1992.
Analysts put the improving claimant count data down to the sharp drop in the number of people signing on, reflected in the lower redundancy rate and the greater willingness of the British workforce to accept measures such as pay freezes and shorter working hours.
While RBC Capital Markets’ Richard McGuire said he would be reticent to judge today’s numbers as signalling the onset of a sustained labour market recovery, “they further underline the sector’s surprising resilience during this recession, which owes much to the remarkable flexibility of the UK workforce.”
Economists also pointed out that the rise in employment was driven by part-time workers – full-time employment fell by 69,000 on the quarter.