U.K unemployment fell by 82,000 between August and September, signaling the biggest quarterly fall in unemployment since 2001. According to data from the Office for National Statistics, ONS, the unemployment rate was 7.8 percent, 0.2 percentage points lower than the preceding quarter. In addition, the ONS pointed out that the number of people claiming job seeker’s allowance was reduced by 3,000 to 1.58 million in the month of September.
On the flip side, employment increased by 40,000 to 29.6 million. This signaled the highest number of people to be employed in the U.K since 1971. “We see more people looking for work and actually finding work, so I think there’s a really strong labor market there,” said the Work and Pensions minister, Mark Hoban, in an interview with BBC. Hoban’s remarks, coupled with the reports from the ONS, have restored some sense of bullishness in the U.K., which has for a long time been crushed under the weight of the widely documented Eurozone crisis. “I think there’s more flexibility in the labor market, although this month we’ve seen a big increase in full-time jobs and no movement at all in the number of part-time jobs,” added Hoban.
One notable highlight was the fact that the working population’s continued reluctance toward the public sector increased over the three month period. Employment in the public sector reduced by 24,000 to come in at 5.7 million; this marked the 12th consecutive month of reduced employment in the public sector. Private sector employment continued to edge up, rising 65,000 to 23.8 million.
ING’s James Knightly offered his insights on these reports. Knightly argued that despite the gains in employment, the wage growth still remained pegged on a stagnant point of 1.8 percent year on year. Knightly however, contended that the gains in employment, coupled with rising consumer confidence, were indicative of the stabilizing domestic situation in the U.K.
Ruffles in the political front
As expected, these advancements in the economical landscape were accompanied by ruffles in the political scene. Ed Miliband, the leader of the opposition, argued that long term un-employment was still stubbornly high. He further added that the problem was of fundamental importance to the whole country. Prime Minister David Cameron, while addressing issues at Prime Minister’s Questions, pointed out that the 10,000 dip in long term youth unemployment signaled the significance of the government’s work program. Cameron however, maintained that there was still more to do.
What is interesting is the fact that many analysts did not expect unemployment to dip. On the contrary, they expected it to rise. Ross Walker, a U.K. economist at Royal Bank of Scotland Group plc (NYSE:RBS), pointed out that the flexibility of the work force partly explained the unexpected employment dip.