Analysts await unemployment data

Queue outside Jobcentre PlusBritain's surprisingly resilient jobs market is set to come under scrutiny when the latest official unemployment figures are released.

Experts will be scouring the data for signs of weakness as the economy remains mired in recession.
Recent employment trends in the UK have been far better than expected, with last month's figures from the Office for National Statistics showing unemployment falling to its lowest level for a year after a big jump in the number of people in work.

It is thought the Olympic Games were a major driver behind the 46,000 fall in the jobless total in the quarter to June, to 2.56 million. Most of the quarterly fall in unemployment was recorded in London which hosted the Olympics and Paralympics over the summer.

Last month's figures also showed the number claiming jobseeker's allowance in July was 1.59 million, down by 5,900 on June, while almost 30 million people were in work, up by 201,000.

Economists believe that some of the Olympics-related hiring will start to drop out in the latest report, with Investec Securities forecasting that unemployment will fall by a less impressive 34,000 in the quarter to July and that the jobseeker's claimant count will remain unchanged.

The overall trend remains surprisingly positive and there are suspicions over the figures, which come against a grim economic background in the UK. The country is suffering its longest double-dip recession since the 1950s, with gross domestic product - a broad measure of the economy's value - falling 0.5% between April and June.

Philip Shaw at Investec said that while jobs market trends are "remarkable", there were two possible reasons why unemployment is not rising: self-employment has increased by 218,000 over the past year and firms are keeping hold of staff, albeit by offering more modest pay increases.

IHS Global Insight economist Howard Archer is forecasting an even rosier picture for the latest jobs figures, pencilling in a 49,000 fall in unemployment in the quarter to 2.55 million. He said he believes unemployment will start to rise again later this year.

"Unless the economy starts showing sustained decent underlying improvement, pressure will increase on firms to release some of the workers that they have been holding on to. We suspect that the number of unemployed will reach a peak of 2.8 million in 2013 which would see the unemployment rate reach 8.7%," he said.

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Analysts await unemployment data

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