UK unemployment has fallen to its lowest level since 2008, when the fall of the US investment bank Lehman Brothers brought the global economy to the brink of collapse.
In a pre-election boost to the UK government, the number of unemployed people fell to 1.97 million between June and August after the largest annual fall since records began in 1972.
It was the first time below the 2 million mark since the three months between September and November 2008, according to the Office for National Statistics.
CHILD POVERTY ARTICLE: *www.bbc.com/news/uk-scotland-glasgow-west-29618050
David Cameron said: “The biggest-ever fall in unemployment in
history, taking it below 2m, is great news. Our plan is working, but
there’s still much more to do.”
The number of unemployed people was 538,000 lower on an annual basis.
The jobless rate in Britain fell by more than City economists had been expecting, to 6% in the three months to August, from 6.2% in the quarter to July. The forecasts had been 6.1%. The last time the unemployment rate was lower than 6% was in August 2008, when it was 5.9%.
Pay increased by 0.7% over the three months, compared with a year earlier, prolonging the fall in real pay as wage growth continued to lag inflation. It was, however, a slight improvement on the 0.6% pay growth between May and July.
Pay growth excluding bonuses was 0.9%, up from 0.8%.
Frances O’Grady, the TUC general secretary, said UK workers had been excluded from the recovery. She said: “The real value of wages has fallen again this month. This is not only the longest and deepest pay cut on record but there is no end in sight.”
Rachel Reeves, the shadow work and pensions secretary, said: “Today’s fall in overall unemployment is welcome, but the new figures show working people are continuing to see their pay fall far behind the cost of living.”
Economists said the fall in unemployment masked other signs that the jobs market was weakening. John Philpott, director of The Jobs Economist consultancy, said the fall to below 2 million was partly explained by the rise in the number of economically inactive people, describing those who are unemployed but not seeking or available to work.
The number jumped by 113,000 over the quarter to 9.03 million people. Almost half of the rise was down to an increase in the student population.
Job creation also slowed between June and August, with employment up by 46,000 to 30.76 million. It was the smallest quarterly increase since March to May 2013.
Charles Levy, a senior economist at Lancaster University’s Work Foundation, said: “The fall in unemployment appears to be connected to a significant withdrawal from the labour market.
Economic inactivity increased by 113,000 in the three months to August. That coupled with sluggish wage growth which remained at half the rate of inflation in August should start alarm bells ringing and be the focus of the chancellor’s autumn statement.”
The number of people claiming jobseeker’s allowance was 951,900 in September, 18,600 fewer than August. Economists had predicted a 35,000 drop.
The employment rate rose to 73% between June and August, a level last seen in spring 2008. The last time it was higher was January to March 2005, when it was 73.1.
Simon Walker, the director general of the Institute of Directors, said falling unemployment was testament to the “fortitude of British business”. He added: “A relatively high level of employment during the recession was the silver lining to an otherwise very dark cloud, and we know that many businesses did all they could to keep people in work.
“The challenge now is to ensure that the productivity of the labour
force increases and that economic growth is felt in peoples’ pockets.
The case remains that too many people still at present feel the effects
of recession more keenly than the benefits of recovery.”
Walker said real wage growth, which has remained elusive in the UK, would be the “litmus test for this recovery”.
Philip Shaw, an economist at Investec, said the Bank of England was unlikely to raise interest rates until August 2015, delaying the first hike until then because of a combination of low inflation - currently at 1.2% - weak pay growth, and international economic uncertainty. Shaw was previously predicting the first rate rise would come in November this year.
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In a pre-election boost to the UK government, the number of unemployed people fell to 1.97 million between June and August after the largest annual fall since records began in 1972.
It was the first time below the 2 million mark since the three months between September and November 2008, according to the Office for National Statistics.
CHILD POVERTY ARTICLE: *www.bbc.com/news/uk-scotland-glasgow-west-29618050
The number of unemployed people was 538,000 lower on an annual basis.
The jobless rate in Britain fell by more than City economists had been expecting, to 6% in the three months to August, from 6.2% in the quarter to July. The forecasts had been 6.1%. The last time the unemployment rate was lower than 6% was in August 2008, when it was 5.9%.
Pay increased by 0.7% over the three months, compared with a year earlier, prolonging the fall in real pay as wage growth continued to lag inflation. It was, however, a slight improvement on the 0.6% pay growth between May and July.
Pay growth excluding bonuses was 0.9%, up from 0.8%.
Frances O’Grady, the TUC general secretary, said UK workers had been excluded from the recovery. She said: “The real value of wages has fallen again this month. This is not only the longest and deepest pay cut on record but there is no end in sight.”
Rachel Reeves, the shadow work and pensions secretary, said: “Today’s fall in overall unemployment is welcome, but the new figures show working people are continuing to see their pay fall far behind the cost of living.”
Economists said the fall in unemployment masked other signs that the jobs market was weakening. John Philpott, director of The Jobs Economist consultancy, said the fall to below 2 million was partly explained by the rise in the number of economically inactive people, describing those who are unemployed but not seeking or available to work.
The number jumped by 113,000 over the quarter to 9.03 million people. Almost half of the rise was down to an increase in the student population.
Job creation also slowed between June and August, with employment up by 46,000 to 30.76 million. It was the smallest quarterly increase since March to May 2013.
Charles Levy, a senior economist at Lancaster University’s Work Foundation, said: “The fall in unemployment appears to be connected to a significant withdrawal from the labour market.
Economic inactivity increased by 113,000 in the three months to August. That coupled with sluggish wage growth which remained at half the rate of inflation in August should start alarm bells ringing and be the focus of the chancellor’s autumn statement.”
The number of people claiming jobseeker’s allowance was 951,900 in September, 18,600 fewer than August. Economists had predicted a 35,000 drop.
The employment rate rose to 73% between June and August, a level last seen in spring 2008. The last time it was higher was January to March 2005, when it was 73.1.
Simon Walker, the director general of the Institute of Directors, said falling unemployment was testament to the “fortitude of British business”. He added: “A relatively high level of employment during the recession was the silver lining to an otherwise very dark cloud, and we know that many businesses did all they could to keep people in work.
Walker said real wage growth, which has remained elusive in the UK, would be the “litmus test for this recovery”.
Philip Shaw, an economist at Investec, said the Bank of England was unlikely to raise interest rates until August 2015, delaying the first hike until then because of a combination of low inflation - currently at 1.2% - weak pay growth, and international economic uncertainty. Shaw was previously predicting the first rate rise would come in November this year.
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