Unemployment in surprise increase

Unemployment is at the highest level since February 2010 after an unexpected jump in jobless levels in the three months to June.

The unemployment rate rose to 7.9 per cent by the end of June, up from 7.8 per cent in the first quarter of the year as a total 2.49m people were out of work, the Office for National Statistics said.

The number of people claiming benefits rose to 37,100 in the quarter, the biggest increase since May 2009, and above economists’ expectations for a 20,000 gain.

There were 25,000 more people employed in the quarter, but the rise was not enough to compensate for the rise in the labour force.

Centre for Economics and Business Research economist Scott Corfe said the figures showed “a further deterioration in labour market conditions.”

“There is a significant disparity between male and female unemployment trends,” he said, pointing to a 1.6 per cent year on year fall in male unemployment while women saw unemployment levels rise 5.6 per cent.

“This is likely to reflect the impact of public sector job cuts, given that a higher proportion of public sector workers than private sector workers are women; for example, about three quarters of employees in local government are female,” Corfe said.

Markit chief economist Chris Williamson said the figures were “very disappointing”.

“One of the most important numbers in this report is the rate of growth of employee pay, which showed a rise of just 2.2 per cent on a year ago,” he said, referring to figures excluding bonuses.

“It means that real pay is falling at an annual rate of 2.2 per cent, which is one of the reasons we expect consumer spending to remain subdued in coming months. With consumer spending accounting for around two-thirds of GDP, it is therefore likely that economic growth will also remain modest at best.”