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Steady jobless rate fuels recovery hopes in Britain
2009-10-14
LONDON (AFP) - Britain's jobless rate held steady on a quarterly basis for the first time since March 2008, fuelling hopes that the country's battered economy will soon officially exit a deep recession. The unemployment rate remained at 7.9 percent of the labour force in the three months to August, the Office for National Statistics (ONS) announced on Wednesday. The news comes ahead of data due next week that could show the British economy having officially emerged from a deep recession. Market expectations had been for a rate of 8.0 percent. Since March 2008, the jobless rate has increased every subsequent month as companies slashed jobs to save cash amid the downturn. At the same time, however, the ONS revealed on Wednesday that the number of people unemployed in Britain rose by just 88,000 people in the three months to August to reach 2.47 million people -- the highest level since 1995. Britain must wait until October 23 for official data confirming whether the nation has indeed ended its worst recession in decades that began in the second quarter of 2008. "The worst of the job losses are behind us ... and a tentative stabilisation in the labour market is under way," said Hetal Mehta, senior economic advisor at Ernst & Young. "However, in an environment where demand remains weak, firms will continue to cut back jobs in a bid to survive. "This is likely to carry on until the recovery gathers substantial pace, most likely towards the end of next year." Economists expect a time lag between the end of a recession and a recovery in unemployment, because many companies continue cutting staff after they return to growth. The ONS added on Wednesday that despite fears of a youth unemployment crisis, the number of unemployed young people seeking a job eased to 946,000 in the three months to August. That compared with 947,000 young people in the three months to July, which was the highest figure since records began in 1992. "The brief summary is that unemployment is going up but more slowly than economists expected," said ECU Group analyst Kit Juckes. "Further rises in unemployment are inevitable but the trend in job losses is slowing," he added. Sterling rose against rival currencies as the foreign exchange market digested the unemployment data. "Although these figures indicate that unemployment is still rising, they are slightly better than expected," said CurrenciesDirect analyst Mark O'Sullivan. "Following a period of bad news for the UK economy this piece of data should see a sterling rally against both the euro and dollar in the coming days." Elsewhere on Wednesday, London's FTSE 100 index of top shares posted a 12-month high above 5,200 points. - Office for National Statistics
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