Strong employment figures defy slowdown
The labour market remains strong despite a slowing economy, according to the latest government figures.
The Office for National Statistics (ONS) said the employment rate for people of working age was 74.8 per cent for the three months to January 2008, up 0.3 per cent from the previous quarter, while the number of unemployed people decreased by 32,000.
This means the number of people in employment is up to 29.46 million, which the government says is a record high.
Employment minister Stephen Timms said the “strong set of figures” showed the UK was continuing to maintain a rate above those of most EU countries.
“Gone are the days when whole cities and towns were suffering high unemployment,” he said.
“Every region and country in the UK now benefits from higher employment and there are a million fewer people on key out of work benefits than ten years ago.”
During the quarter, the fall in unemployment mainly occurred among 16- to 17-year-olds.
The number of people claiming benefits also fell to 793,500 in February 2008, down 2,800 over the previous month and down 126,500 over the year, the lowest figure since June 1975.
Mr Timms acknowledged some “small areas” were still suffering from low employment, however.
“We are taking steps to address this by working with local partners in deprived communities to ensure people get the support they need to move off benefits and into work,” he added.
Howard Archer, economist at Global Insight, said the Bank of England would be “pleased” a “still-tightening labour market and elevated inflation expectations did not lead to higher pay increases at the start of the year”.
“Latest survey evidence also suggests that pay awards have been broadly limited so far in 2008. If this trend continues, it will increase the scope of the Bank of England to cut interest rates over the coming months.”
Earlier today minutes published by the Bank showed the monetary policy committee (MPC) voted seven to two in favour of maintaining interest rates at their current 5.25 per cent rate.
John Gieve and David Blanchflower sought a quarter-point cut, but most felt the “balance of risks” did not justify such a move in March’s decision.
The MPC, which cut interest rates by 0.25 per cent in December 2007 and February, is expected to make further reductions over 2008 – with analysts saying there is a strong possibility rates will hit 4.5 per cent by the end of the year.
