UK unemployment increases for first time since 2013

Total unemployment in the UK has risen for the first time in more than two years, according to offic

Total unemployment in the UK has risen for the first time in more than two years, according to official figures released today. Photo: Philip Toscano/PA Wire - Credit: PA

The number of people out of work in the UK has increased for the first time in more than two years, official figures indicated today.

But the number of people claiming the main unemployment-related benefit continued to fall in most parts of Suffolk and north Essex last month.

Total unemployment rose by 15,000 to 1.85million in the three months to May, according to the latest figures from the Office for National Statistics (ONS), the first increase in the quarterly total since the three months to March 2013.

The narrower count of those eligible to claim the Jobseeker’s Allowance continued its long-term decline last month, falling by 2,500 compared with May to 751,500.

However, experimental statistics which also include the out-of-work element of claims for the Government’s new Universal Credit increased by 7,100 to 804,200 in June representing the first monthly increase in overall claims since October 2012.

Most parts of Suffolk saw a fall in Jobseeker’s Allowance claims, with the biggest declines, in each case cutting the local unemployment rate by 0.1 of a percentage point, coming in Suffolk Coastal, down 44 to 368 (a rate of 0.5%), and Waveney, down 37 to 1,069 (1.6%).

Smaller falls, relative to the size of the local workforce, left the jobless rate unchanged in Ipswich, down 46 to 1,885 (2.2%), Babergh, down 31 to 400 (0.8%), and St Edmundsbury, down 29 to 617 (0.9%).

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However, the count remained unchanged in Forest Heath at 300 (a rate of 0.7%) while in Mid Suffolk the total grew by 16 to 462 (leaving the rate unchanged at 0.8%).

It was a similar picture in north and mid Essex where the biggest fall came in Tendring, where the count fell by 83 to 1,713 and the rate by 0.2 to 2.2%.

There was 0.1 fall in the rate in Colchester, down 74 to 1,157 (1.0%), Chelmsford, down 27 to 1,320 (1.2%), and Uttlesford, down 18 to 273 (0.5%).

In Braintree, a fall of 49 to 1,070 left the rate unchanged at 1.2% while in Maldon the total edged two higher to 380, with the rate also unchanged, at 1.0%.

Nationally, the number of people in work during the three months to May fell by 67,000 compared with the previous quarter to 30.98m, the first quarterly fall since April 2013.

However, while the number of part-time workers fell by 97,000 the number of full-time workers increased by 30,000, the figures showed.

Youth unemployment (covering those aged 16 to 24) fell by 13,000 to 729,000 and long-term unemployment (those out of work for more than 12 months) fell by 53,000 to 570,000.

There was also further positive news on wages, with total average weekly earnings rising by 3.2% year-on-year in the three months to May, up from 2.7% in the three months to April.

It is the strongest rate since April 2010 and, with inflation hovering at around zero, it means that real terms pay is improving at a rate not seen for nearly eight years.

Regular pay, excluding bonuses, rose by a more modest 2.8%, but this was still the highest rate of increase since February 2009.

Possible reasons for the rise in unemployment include business uncertainty in the run-up to the General Election and a knock-on effect from the weaker-than-expected rate of economic growth in the opening months of 2015. However, statisticians were unable to comment on either theory.

ONS spokesman Nick Palmer said: “It’s possible that the rate of improvement in the labour market that we have seen over the last three years may have eased off, though it is too early to be certain.”

Today’s figures appear broadly neutral in terms of their implications for interest rates, with the increase in pay offsetting the fall in unemployment.

Yesterday, expectations about an increase in interest rates were heightened by comments from Bank of England governor Mark Carney, who said the timing of a rise was moving closer.

Vicky Redwood, chief UK economist at Capital Economics, said: “The soft tone of the latest UK labour market figures will temper expectations of a near-term rate rise following yesterday’s relatively hawkish comments by some MPC members including the Governor.

“Unemployment rose on both main measures. The claimant count was up by 7,000 in June, the first rise since 2012. And the ILO unemployment rate rose from 5.5% to 5.6%, driven by a 67,000 drop in employment in the three months to May.

“Admittedly, these changes aren’t too serious, especially given that surveys of employment intentions remain fairly strong. But this could be a further indication that the driver of economic growth is starting to shift from employment to productivity.

Meanwhile, the headline (three month average) rate of average earnings growth rose from 2.7% to 3.2% in May (consensus 3.3%). But the annual growth rate in fact nudged down from 2.7% to 2.6%. Excluding bonuses, growth ticked down from 2.8% to 2.7%. So there is no need for the MPC to panic about wage growth yet, especially given that the softer labour market activity shown today could act as a brake on pay growth.

“Although some members of the MPC are clearly ready to start voting for a rate rise soon, we don’t think that the economic data are strong enough to push a majority towards one yet,” she added.