U.K. Unemployment Hits 10-Year High

The total number of people out of work continued to rise sharply at the end of last year but failed to top the 2m mark as widely expected according to official figures published on Wednesday.

This benchmark is likely to be exceeded in the opening months of this year, with redundancies announced in the final three months of 2008 climbing to the highest level since comparable records began in 1995.

The pace of job cuts across almost all areas of the economy has risen even more sharply in the opening months of this year with employers in the retail, manufacturing, construction and financial services sectors announcing a spate of redundancies in recent weeks.

Redundancies in the construction sector alone during the final three months of last year were more than four times higher than in the final quarter of 2007. Job cuts in the manufacturing, retail and leisure, and finance and business services sectors had also doubled over the same period, according to the Office for National Statistics.

The total number of unemployed according to the ONS rose by 146,000 to 1.97m during the three months to the end of December. This was the highest level since August 1997, which was shortly after Labour came to power.

The unemployment rate of 6.3 per cent, although still lagging behind most of the UK’s main continental European rivals, was the highest level since 1999.

The number of people claiming unemployment benefit also rose for the twelfth month in succession, climbing by 73,800 in January to 1.23m - also the highest level since 1999.

Job vacancies, another good guide to the health of the labour market, have continued to tumble, falling by a further 76,000 to 504,000 during the latest three monthly period to the end of January. Officials said this was the lowest level since comparable records began in 2001.

Manufacturing vacancies were 48 per cent lower than at the same stage a year ago, while construction industry vacancies were almost 42 per cent lower.

The trials of the job market, however, have failed to trigger, at least so far, a rise in industrial disputes.

Rises in earnings have also remained modest. Average annual earnings growth, including bonuses, was 3.2 per cent during the three months to the end of December - the same as during the previous three months.

Average earnings growth excluding bonuses was also unchanged at 3.6 per cent.

TradingEconomics.com, Financial Times
2/11/2009 5:21:26 AM