U.K. Unemployment Declined to the Lowest Since 1975

U.K. unemployment fell in December to the lowest since 1975 as the fastest annual economic growth in three years encouraged companies to hire more workers.
TradingEconomics.com, Bloomberg 1/16/2008 6:53:34 AM

Claims for jobless benefits dropped 6,400 from November to 807,700, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 28 economists was for a drop of 5,000. Wages including bonuses rose 4 percent in the quarter through November.

The report shows the economy stayed strong enough to spur jobs growth before a slowdown caused by higher credit costs. Economists forecast the Bank of England, which cut the benchmark interest rate last month, will reduce it again in February as the weakest housing market since Britain's last recession in 1992 threatens to derail consumer spending.

The Bank of England reduced the key rate by a quarter point in December to 5.5 percent on concern economic growth is slowing. It predicts expansion of about 2 percent this year, down from 3 percent in 2007. The economy grew 0.5 percent in the fourth quarter, the weakest pace in two years, the National Institute of Economic and Social Research said on Jan. 12.

The unemployment rate as measured by International Labour Organization standards was 5.3 percent in the quarter through November. The rate compares with 7.2 percent in the 13-nation euro region, 5 percent in the U.S., and 3.8 percent in Japan.

The British economy is still creating jobs, swelling total employment by the most in a decade to 29.4 million people, which was the highest since records began in 1971, the statistics office said today. The unemployment rate, based on jobless benefit claims, was at 2.5 percent, matching the lowest since 1975, the statistics office said.

Slowing economic growth may raise unemployment, weighing on spending by consumers as they struggle to service a record 1.4 trillion pounds ($2.8 trillion) of debt and a housing slowdown erodes the value of their homes.

U.K. Unemployment Declined to the Lowest Since 1975