UK unemployment rate drops to 7.7%

David Cameron says Britain is "turning a corner" but admits the government has "still got a long way to go" on unemployment

The rate of unemployment in the UK dropped to 7.7% between May and July from 7.8% in the previous three months.

The governor of the Bank of England, Mark Carney, has said that interest rates are unlikely to be raised before the rate falls to 7%.

The number of people unemployed fell 24,000 in the period to 2.487 million.

The official figures also showed the number of people claiming Jobseeker's Allowance fell 32,600 to 1.402 million, its lowest level since February 2009.

However, the number of people working part-time because they cannot find a full-time job rose to 1.45 million, the highest since records began in 1992 and double the number of five years ago.

Almost a third of men working part-time were doing so because they could not find full-time employment. The corresponding figure for women was 13.5%.

'Recovering market'

Analysis

In a week when the chancellor said the economy was turning a corner, here are labour market figures that strengthen the argument that the economy is moving in the right direction.

The indicator watched most closely by the Bank of England, the unemployment rate, has fallen from 7.8% to 7.7% - the Bank says it won't consider raising interest rates until the rate is down to 7%.

But long term unemployment - those out of work for a year or more - has not fallen.

Youth unemployment is up slightly. Sustained economic growth will be needed to achieve a marked improvement in the jobs market and that all-important 7% rate.

"It's another set of impressive figures on the job market with positive signs on all three main indicators," said Victoria Clarke at Investec.

"It suggests the jobs market is recovering, much like the broader economy."

"It reinforces our view that unemployment will come down to 7% more quickly than the Bank of England expects."

Mr Carney said he expected the fall to 7% to take at least three years.

The pound rose against both the euro and the US dollar following the release of the figures.

The number of people claiming Jobseeker's Allowance in July was revised downwards.

The fall of 68,900 in July and August was the biggest two-month drop since June 1997.

August's fall in the claimant count was the tenth consecutive month that the figure had dropped.

'Total complacency'

The North East of England had the highest rate of unemployment between May and July, with 10.4%, while the South East had the lowest at 5.8%.

The biggest increase during that period was in the North West of England, where unemployment rose by 13,000.

The South East showed the biggest fall, with 29,000 fewer people unemployed than there were in the previous three months, followed by the East Midlands, with a fall of 11,000.

Labour leader Ed Miliband stressed the uneven picture around the country in exchanges during Prime Minister's Questions.

"The chancellor went out and said he had saved the economy," he said.

Mr Miliband described that as "total complacency and total hubris... at a time when, even today, unemployment is rising in half the country".

The Prime Minister, David Cameron, attacked Labour's policies.

Start Quote

The positive figures are a measure of the resilience and the flexibility of Britain's labour market”

End Quote David Kern British Chambers of Commerce

"They told us that unemployment would go up and not down. They told us that the growth of private sector jobs would never make up for the loss of [public] sector jobs," he said.

"They have been wrong on every single one of those issues."

'Resilience and flexibility'

Average pay rose by 1.1% including bonuses compared with the same time last year, or 1.0% excluding them, which is well below the 2.8% rate at which prices are rising.

Between March and June 2013, public sector employment fell 34,000, while private sector employment rose 114,000.

"The positive figures are a measure of the resilience and the flexibility of Britain's labour market," said David Kern, chief economist at the British Chambers of Commerce.

"The further increase in private sector employment, at a time when the public sector is still shedding jobs, demonstrates yet again that private firms are able to drive the recovery."

The figures for unemployment in the three months to July are based on the Labour Force Survey, in which the ONS speaks to 60,000 households once a quarter, making it the country's biggest household survey.

The ONS is 95% confident that the main unemployment figure is correct to plus or minus 85,000 people.

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