Unemployment rate up to highest since 1995

By Michael Millar

Date: Wednesday 18 Jan 2012

The UK unemployment rate hit 8.4% in the three months to the end of November, higher than the 8.3% analysts had been expecting.

The unemployment rate has not been higher since 1995 and the number of unemployed people has not been higher since 1994, according to the Office for National Statistics.

There were 2.68m unemployed people over the period, up 118,000 on the quarter.

Youth unemployment rose to a record high of 1.04m, pushing the unemployment rate for 16-24-year-olds up to 22.3%.

Total pay (including bonuses) rose by 1.9% on a year earlier, down 0.2% on the three months to October 2011, with both the private and public sectors showing lower pay growth.

Again this rise was less than the 2% rise that experts had forecast.

There were 1.6m people claiming Jobseeker’s Allowance (JSA) in December 2011, up 1,200 on November.

But, this was considerably lower that forecasted, with analysts predicting a rise of 7,000 to 8,000.

The October claimant count was also revised down slightly.

Blerina Uruci at Barclays Capital said the claimant count measure leads the unemployment figures and as such could be a sign that the pick-up in joblessness was stabilising.

"However, the deteriorating economic conditions increase the uncertainty around such an outcome," she warned.

Howard Archer, chief UK economist at IHS, said the soft overall labour market data and ongoing low earnings growth made further quantitative easing by the Bank of England in February seem more likely.

"The soft labour market data fuel recession fears while muted earnings growth reinforces belief that consumer price inflation is headed down appreciably further during 2012 after falling to 4.2% in December from 4.8% in November," he said.

The Government has pinned its hopes for the economy on a private sector-led recovery as it makes large cuts to the public sector as part of its austerity drive.

But the latest figures show the private sector is yet to take up the slack.

The number of people in public sector employment was 5.99m in September 2011, down 67,000 from June 2011.

However, the number of people in private sector employment in September 2011 was 23.12m, up just 5,000 from June 2011.

In the year to September the private sector created 262,000 jobs, but again this was more than offset by the 276,000 jobs lost in the public sector.

Andy Dallas, associate director at recruitment consultancy Robert Half UK, said hiring had been muted due to ongoing problems in the eurozone, but businesses were expressing a desire to recruit new staff to manage rising workloads and business expansion plans.

“Robert Half carried out research in December 2011 to find out the hiring plans among UK senior executives for the first half of the year; the findings showed that private companies expect a net 14% hiring increase, with publicly listed companies being most bullish on expansion," he said.

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