U.K. Unemployment Jumped the Most Since 1992


U.K. unemployment jumped the most in June since the aftermath of the last recession in 1992 as the economic slowdown forced housebuilders and banks to cut jobs and stop hiring.

Claims for jobless benefits climbed for a fifth month, increasing 15,500 from May, the Office for National Statistics said today in London. Economists predicted 10,000, the median of 29 forecasts in a Bloomberg News survey shows. The unemployment rate on that basis was 2.6 percent.

The economy and labor market face ``consequences'' as the Bank of England fights to bring accelerating inflation under control, policy maker Andrew Sentance says. Rising unemployment may exacerbate Prime Minister Gordon Brown's woes after the worst housing market slump since the last recession helped push his party's support close to the lowest since World War II.

The pound fell as much as 0.2 percent against the dollar after the data and traded at $2.0033 as of 12:50 p.m. in London. U.K. government bonds stayed higher, pushing the yield on the two- year gilt down 3 basis points to 4.809 percent.

Unemployment, based on International Labour Organization standards, was 5.2 percent in the three months through May. That compares with 7.2 percent in the euro region, 5.5 percent in the U.S. and 4 percent in Japan, the statistics office said.

Homebuilders announced more than 4,000 job cuts since the start of July, with Redrow Plc and Bovis Homes Group Plc each saying they will slash their workforces by 40 percent. HBOS Plc, the U.K.'s biggest mortgage lender, said last week that house prices fell in June from a year earlier by the most since 1992.

The collapse of the U.S. subprime mortgage market has cost financial institutions worldwide more than $416 billion in losses and writedowns and led them to shed almost 94,000 staff. Barclays Plc, the U.K.'s fourth-biggest bank, said July 8 it cut about 300 jobs because customer demand is drying up.


TradingEconomics.com, Bloomberg
7/16/2008 6:48:38 AM