Financial News

  • 20 December 2013, 10:13

Jobless Fall Raises Chance Of Interest Rate Rise

A big fall in the number of unemployed has raised the prospect of interest rates rising much earlier than expected.

The latest official figures showed 99,000 fewer people were jobless in the three months to October, while the number in work topped 30 million for the first time on record.

It meant the jobless total fell to 2.39 million - the biggest cut in over a decade - over the period.

The Office for National Statistics (ONS) said that left the jobless rate at 7.4% - its lowest level for more than four years - and nearing the threshold for when the Bank of England may consider raising borrowing costs by increasing the base rate of interest.

The number of people in work was 30.09 million, an increase of 250,000 over the quarter and of almost 500,000 compared with a year ago.

Private sector employment reached a record high of 24.4 million, and long-term and youth unemployment also fell.

But 1.47 million people were in part-time jobs because they could not find full-time work, the highest total since records began in 1992.

Other data from the Office for National Statistics (ONS) showed a 45,000 fall in those classed as economically inactive, to 8.92 million - a rate of 22% and the lowest since 1991.

The number of people claiming Jobseeker's Allowance fell by 36,700 in November to 1.27 million, the 13th consecutive monthly cut.

The number of people unemployed for more than a year fell by 33,000 to 866,000, the lowest for over a year, while youth unemployment dipped by 19,000 to 941,000.

Public sector employment increased slightly, by 4,000, to 5.6 million, largely because of a rise in the NHS, although the figure fell by 11,000 in local government.

The employment rate for over-65s is now 10%, the highest since records began in 1992.

Average earnings increased by 0.9% in the year to October, down by 0.1% on the previous month, giving a weekly average of 476.

Nigel Meager, director of the Institute for Employment Studies, said: "Today's statistics from ONS show another strong improvement, confirming that the UK labour market recovery is well under way."

Employment Minister Esther McVey said: "It is really encouraging news that the number of people in jobs has increased by a quarter of a million in the last three months, bringing the total number of people in work to a record-breaking 30 million.

"Together with a big fall in unemployment, this shows that the Government's long-term economic plan to get people off benefits and into work is proving successful."

The Bank of England has said it will not consider raising the base rate of interest from 0.5% until the unemployment rate falls to 7%.

It currently expects that rate to be achieved in the latter half of 2015 though economists raised fears today that consumers may endure rising borrowing costs earlier, as a result of the acceleration in the job market's recovery.

In a separate development the Bank of England said Britain's economic recovery may be at risk if sterling strengthens much further.

The bank said that the 2% appreciation in sterling over the previous month reflected a stronger economic outlook, but could jeopardise exports.

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