Unemployment down but benefit claimants spike

UK unemployment has declined to 7.7 per cent as the numbers without a job fell by 88,000 in the three months to April, the Office for National Statistics has said.

But in May the number of people claiming unemployment benefit jumped by 19,600, more than double forecasts for an increase of 7,000 and the biggest rise since July 2009.

Unemployment stood at 2.43m people in April – and the quarterly fall was the largest seen since 2000. The jobless rate fell from 7.9 per cent in the November to January quarter.

The two measures have been diverging for several months and so provide limited information about the underlying strength of the labour market.

“The labour market looks to be on the mend. With claimant count data possibly distorted again by changes to benefit rules, the most reliable picture of the health of the labour market comes from the wider survey-based measure,” said Markit chief economist Chris Williamson.

But he warned that “persistent niggling worries that the recovery remains very fragile” remain, pointing to falling levels of new job vacancies; the high benefit claimant count, and negligible pay rises, a sign of job insecurity.

Other economists were more pessimistic. Nida Ali, economic advisor to the Ernst & Young ITEM Club said the jump in claimants was “a more accurate reflection of the scale of weakness in the UK labour market and, as the pace of the public sector spending cuts accelerates, this trend is expected to continue over the coming year.”

The ONS said it had no clear reason for the divergence in the two jobless measures.

It said the claimant count figures had in recent months been skewed by changes to benefit rules to lone parents, which had increased the number of women claiming jobseekers' allowance.

However in May, the number of men claiming jobless benefit increased by 11,100 – the biggest rise since January 2010 – and more than the 8,500 increase in the number of female benefits claimants.
Wage growth slowed in the three months to April, with regular pay excluding bonuses rising by two per cent – its weakest pace since last August.

Including bonuses, average earnings rose by 1.8 per cent – the weakest since December 2010.