U.K. December jobless falls to lowest since mid-2011

Claimant count at 1.557 million
By Patrick Graham and Olesya Dmitracova
|hrreporter.com|Last Updated: 01/23/2013

LONDON (Reuters) — British unemployment fell for the 10th quarter running at the end of last year and jobless claims hit their lowest since mid-2011 in December, a rare bright spot as the economy flirts with another recession.

"Both unemployment and jobs creation are completely at odds with the weakness (in) much of the real economy data that are being published," said Investec economist Philip Shaw. "The bottom line is that a robustly performing labour market is good for confidence and good for public finances."

The Office for National Statistics (ONS) said the number of people claiming unemployment benefit fell by 12,100 last month, confounding analysts' expectations for a flat reading. The claimant count was 1.557 million — the lowest since June 2011.

The number of people without a job on the wider ILO measure also dropped by 37,000 in the three months to November, to 2.490 million — the lowest since March-May 2011.

Strong private sector job creation has been one of the few recent positives for Britain's economy, which is struggling to avoid its third technical recession since 2008.

The number of people in work hit 29.681 million in the three months to November, the highest since records began in 1971.

The ILO jobless rate also ticked down to 7.7 per cent, compared with forecasts for a steady reading of 7.8 per cent.

Economists and policy-makers were already puzzled by the performance of the labour market at a time when the government is cutting public sector jobs and a raft of major companies have slashed jobs.

Airline Flybe was one of the latest to announce it was cutting 10 per cent of its United Kingdom workforce, while London's biggest banks continue to cut back heavily.

The latest official data follows surveys of purchasing managers that showed a fall in employment last month both in Britain's factories and service firms, as well as another poll pointing to slower growth in recruitment.

Annalisa Piazza of Newedge Strategy noted that a slowdown in nominal growth of earnings — which have been falling steadily in real terms — was evidence that the underlying picture may be weaker than the employment figures suggest.

"Despite the relative strength of the labour market, earnings growth continued to moderate," she said. "This is a clear sign of moderate negotiation power from employees that feel the pressure of earnings growing far less than inflation."

The ONS said average weekly earnings growth including bonuses slowed to 1.5 per cent in the three months through November, in line with forecasts. Excluding bonuses, pay grew by 1.4 per cent, also as expected.

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