Hopes that Britain’s economy is starting to recover from recession were boosted by a surprise fall in unemployment to its lowest rate since June 2011 while the number of people in work hit the highest level ever recorded.
Unemployment on the International Labour Organisation measure fell by 50,000 to 2.5 million in the three months to August, pushing the jobless rate to 7.9% from 8.1%, according to the Office for National Statistics. City economists had expected the rate to stay stable. This compares with 10.5% in the EU – Spain had the highest unemployment rate at 25.1% in August while Austria had the lowest at 4.2%.
The number of employed people in Britain rose by 212,000 to 29.6 million, the highest since records began in January 1971, although more than half of the increase was a result of part-time job creation. A survey from Legal & General showed 78% of workers feel secure in their jobs this month.
Jobless benefits claimants dropped by 4,000 to 1.6 million last month, confounding expectations of a flat outturn. This came after a sharp fall of 14,200 in August, which the ONS attributed partly to hiring in London for the Olympics. The Olympic organisers said the games required about 6,000 paid staff, up to 70,000 volunteers and around 100,000 contractors.
“Once again, UK data has rebutted the claim that the UK is as bad as some of the eurozone’s struggling economies,” said ING economist Rob Carnell. “Progress was evident across a broad range of the labour report. With revised GDP data suggesting the UK returned to underlying growth in the second quarter, this labour data provides hope that this recovery has been ongoing over recent months, raising some doubt about whether the monetary policy committee will unleash a new round of asset purchases next month.”