17 April 2013, 16:41  UK jobless rate rises

The number of Britons claiming unemployment benefits decreased unexpectedly in March. Meanwhile, the unemployment rate increased in the three months ended February, and regular wages of U.K. employees recorded the weakest growth on record, signaling that the resilience of the labor market is waning. The number of persons seeking jobless allowance, or the claimant count, dropped by 7,000 sequentially to around 1.53 million in March, after falling by 5,300 in February, the Office for National Statistics said Wednesday. Economists had forecast the claimant count to remain unchanged. However, the claimant count rate remained unchanged at 4.6 percent in February, contrary to economists' forecast for an increase to 4.7 percent. The unemployment rate, measured according to guidelines specified by the International Labor Organization (ILO), rose to 7.9 percent in the three months to February from 7.7 percent recorded in the three months ended November. Economists were looking for a more modest increase to 7.8 percent. The number of unemployed persons was 2.56 million between December and February, up 70,000 from the three months ended November 2012, the statistical office said. "Overall, the data fuel concern that the labor market's recent strength is fraying as the economy continues to struggle for even modest sustained growth," IHS Global Insight Chief European and UK Economist Howard Archer said. Earnings of British employees, including bonus, advanced 0.8 percent year-on-year during the quarter ended February, marking the the weakest growth since 2009. Pay was forecast to increase 1.4 percent. At the same time, regular wages, excluding bonus, increased 1 percent over the same period, which was the slowest growth rate since records began in 2001. The employment rate, meanwhile, stayed virtually unchanged at 71.4 percent at the end of February from the preceding three-month period. The number of persons in employment dropped by 2,000 to around 29.70 million over the period. "While the economy may have just dodged further contraction in the first quarter of 2013, we doubt that growth over the year as a whole will be strong enough to prevent unemployment moving up, especially as public sector jobs will be pared further", Archer added. Data released by the statistical office yesterday showed that UK's headline inflation stayed unchanged at 2.8 percent in March, and remained stubbornly above the 2 percent target, squeezing the purchasing power of consumers. Meanwhile, core inflation rose marginally to 2.4 percent from 2.3 percent. The Bank of England at its April meeting decided not to lift its quantitative easing as policymakers were worried about above target-inflation even after the government allowed it to expand stimulus disregarding high inflation. Standard & Poor's this month affirmed its AAA ratings for the U.K., but warned that there is at least a one-in-three chance of downgrade. Fitch Ratings last month placed the U.K.'s coveted AAA ratings on "watch negative", while Moody's Investors Service stripped Britain of its top rating in February. Yesterday, the International Monetary Fund cut the U.K. growth forecast for this year to 0.7 percent from 1 percent. Next year, the British economy is seen growing 1.5 percent, which is slower than the 1.9 percent forecast earlier.

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