UK unemployment falls by 36,000 to 2.46 million

Watch: Chris Grayling says the drop in the unemployment total is a 'step in the right direction'

UK unemployment fell by 36,000 in the three months to the end of March to 2.46 million, the second quarterly drop in a row, official figures show.

The Office for National Statistics (ONS) said the rate of unemployment in the UK was now 7.7%.

Unemployment among 16 to 24-year-olds stood at 935,000, with the jobless rate for young people now at 20%.

The number of people claiming Jobseeker's Allowance rose by 12,400 in April to 1.47 million, the ONS said.

It added that the number of people in employment rose by 118,000 to 29.24 million, compared with a pre-recession peak of 29.56 million recorded in the three months to the end of May 2008.

Some observers said the rise in employment was a sign the economic recovery was strengthening.

"The strong growth in full-time jobs is especially encouraging, as this is one of the key indicators of a sustainable recovery," said Ian Brinkley at the Work Foundation.

"It now looks likely that the economy expanded more strongly than last month's provisional estimates for output growth suggested," he added.

Official figures showed that the UK economy grew by 0.5% in the first three months of the year.

Regional variations

The latest ONS figures show that the number of unemployed men fell by 31,000 to 1.43 million, while the number of unemployed women fell by 5,000 to 1.03 million.

Analysis

The labour market has shown signs of improvement.

Youth unemployment has registered its first fall since the summer of last year. Overall unemployment fell to 2.46 million, the lowest since the three months ending in July last year. There was an increase in the number of people in work.

The narrower claimant count, covering those claiming Jobseeker's Allowance, did rise in April. Ministers say this can be explained by a shift of some lone parents from income support to unemployment benefit.

Few would venture though that the latest figures herald a dramatic shift in employment prospects. The ability of the private sector to create more than enough jobs to compensate for public sector cuts will be put to the test over the first year of serious deficit cutting.

But of the 12,400 extra people claiming Jobseeker's Allowance, 9,300 were women, the highest figure since October 1996. The number of male claimants rose for the first time since January.

The number of people unemployed for more than 12 months increased by 20,000 to 850,000, the highest number since January 1997.

Within the overall unemployment figures there were wide regional variations, with unemployment rising 6,000 by in London and by 4,000 in the North East. The South East, however, saw unemployment fall by 17,000.

In Wales, the jobless number fell by 10,000, it Scotland it dropped by 8,000 and in Northern Ireland it declined by 6,000.

Benefit changes

Average earnings, including bonuses, rose by 2.3% in the the three months to March, compared with 2.1% for the quarter to February. Despite the rise, analysts said the figure showed that wage demands were unlikely to affect inflation in the short term.

"Wage pressures have remained modest, reinforcing the case against an early increase in interest rates," said David Kern, chief economist at the British Chambers of Commerce.

Unemployment mapped

Unemployment map

The ONS also said that the number of working days lost through labour disputes in the year to March was the joint lowest total since records began in 1930.

Employment Minister Chris Grayling said the figures represented a "step in the right direction", but he warned that the number of people claiming Jobseeker's Allowance was likely to continue to rise.

He said this was in part due to changes in benefits rules, which meant people were moving off other benefits and on to Jobseeker's Allowance. Some single parents, for example, were moving off income support and on to unemployment benefits, he said.

Start Quote

21 year old Nathan Morrison

My strong point is my communication skills but employers don't get to see that unless I get an interview. I haven't been getting very many of them - maybe five since December”

End Quote Nathan Morrison, 21 Unemployed

John Philpott, chief economic adviser to the Chartered Institute of Personnel and Development, said this was a reasonable explanation.

"The labour market is not deteriorating enough [to explain the rise in claimants]," he told the BBC.

Shadow work and pensions secretary Liam Byrne said the government had to do more to get people back to work and questioned why unemployment was falling "much faster" in other developed economies, particularly Germany and the US.

The government must "stop dithering and start delivering", he said.

'Fiscal squeeze'

Some analysts warned that despite the fall in unemployment, the number of people out of work was likely to rise again in the coming months, largely due to government spending cuts.

"We suspect that likely below-trend growth will mean that the private sector will be unable to fully compensate for the increasing job losses in the public sector that will result from the fiscal squeeze that is now really kicking in," said Howard Archer at IHS Global Insight.

He said he expected 2.67 million people to be out of work by the end of this year, with the unemployment rate rising to 8.4%.

The British Chambers of Commerce said the government must do more to help the private sector make up for the jobs being lost in the public sector.

"The burden of regulation on businesses, particularly small- and medium-sized firms still weighs too heavily and in many cases prevents companies from creating jobs," Mr Kern said.

The government has started implementing extensive spending cuts that are designed to reduce the budget deficit, which is the amount it spends each year over and above its income.

It says that the cuts are necessary to restore international investors' confidence in the UK economy, but critics argue that the cuts could jeopardise the UK's fragile recovery.

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