Wage increases catching up with inflation?
A government short of good economic news is pouncing on the latest unemployment figures.
The latest stats from the Office for National Statistics show that unemployment fell by 36,000 on the three months to March to 2.46 million, cutting the overall unemployment rate a tad to 7.7 per cent.
For 16-24- year-olds not in education (ie excluding students looking for part-time work) unemployment fell 40,000 on the quarter to 646,000.
Of course it's not all good news. The number of people claiming Jobseekers Allowance (the claimant count), for example, increased by 12,400 between March and April 2011 to reach 1.47 million.
So let's take a look at the stats in more detail:
The number of people in employment aged 16 and over increased by 118,000 on the quarter and by 416,000 on the year to reach 29.24 million. That will give ministers some comfort that private sector job creation can outweigh public sector job losses.
But the employment total is still 332,000 lower than the pre-recession peak of 29.57 million for the three months to May 2008, which shows the UK economy is still a long way from recovering from the economic consequences of the financial meltdown.
Full-time employment increased by 94,000 to 21.30 million, which continues of the trend of the private sector switching from creating largely new part-time to more new full-time jobs.
The number of people unemployed for up to 12 months fell by 56,000 to reach 1.61 million. But the number of people unemployed for over 12 months increased by 20,000 to reach 850,000, the highest figure since January 1997.
Why did the claimant count rise while the wider measure of unemployment (the labour force survey) falls? I suspect that's something to do with the government's welfare reforms
The economy is growing by enough to reduce the overall unemployment total by a bit but more people who were on other forms of welfare are moving on to unemployment benefit as the rules for disability and lone-parents' benefits are tightened.
There are also a few glimmers that wages are beginning to chase rising prices. Earnings (including bonuses) grew by 2.3 per cent for the three months to March 2011, up from 2.1 per cent for the three months to February. A small change to be sure but an upward tick and perhaps the start of a trend. Also, that global rise includes the public sector, where there's a pay freeze.
Total pay in the finance and business services sector increased from 4.6 per cent to 6.2 per cent, which is quite a rise and one that will worry the Bank of England.
Private sector pay has been in the doldrums for a while but these pay stats suggest companies now have the money to give pay rises closer to the inflation rate.
If that is happening, the Bank's oft-repeated claim that current inflation is just a blip will turn out to be wrong.
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