Surprise fall in UK unemployment

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Cooper: ‘Unemployment will rise’

The number of people unemployed in the UK has fallen unexpectedly for the first time in 18 months.Total unemployment stood at 2.46 million for the three months to November, down 7,000 on the figure for the previous three months. It ends the continuous rise in unemployment that begin in the summer of 2008 after the recession began. Ministers welcomed the figures but warned that joblessness could rise again in the coming months. The rate of unemployment now stands at 7.8%, down from the 7.9% reported last month, the Office for National Statistics (ONS) said. Meanwhile, the number of people claiming Jobseeker’s Allowance fell to 1.61 million in December. That is a fall of 15,200 over the month - significantly greater than the 2,500 anticipated by analysts. The number of 16-24-year-olds out of work also fell over the three-month period between September and November, down from 943,000 to 927,000. Part-time impactBut the fall in unemployment was fuelled partly by an increase in people taking part-time work. The number of people in part-time employment increased by 99,000 over the quarter to reach a record high of 7.71 million.

More than a million of these were working part-time because they could not find a full-time job - the highest figure since records began in 1992, according to the ONS. The number of people neither employed nor looking for work - not included in unemployment figures - was up to 21.2% of the population. That was the highest rate since August 2007. George Buckley, chief UK economist at Deutsche Bank, said workers were more willing in this recession to accept low pay and shorter hours in return for keeping their jobs, helping to stem job losses. “These figures are encouraging,” he said. “In previous recessions it took years for unemployment to stop rising, but that hasn’t happened this time.” Mr Buckley admitted previous predictions of the unemployment rate reaching 10% now looked unrealistic. ‘Still tough’The figures, which came as a surprise to many analysts, were welcomed by Work and Pensions Secretary Yvette Cooper. “The jobs market is still tough for a lot of people, but the drop in unemployment and youth unemployment is very welcome,” she said.

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UK mortgage approvals hit highest level in more than a year

Published: 9:55AM GMT 30 Nov 2009

Approvals reached 57,345 in October, the highest level since March 2008, and
up from 56,205 in September, according to fresh figures from the Bank of
England.

The figures come on the back of a survey
today from Hometrack which showed that prices rose for a fourth
consecutive month in November as a shortage of homes helped drive up prices.
Overall prices climbed 0.2pc in the month to £156,700, the survey showed.

The resilience of the housing market has caught most forecasters by surprise
this year given the life support that many lenders are still on. Nationwide
and Halifax, authors of the two most widely-watched survey of prices, have
both cautioned that the rally is being driven by a shortage of supply and
will lose steam next year.

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Bank of England raises growth and inflation forecasts: economists react

Published: 11:28AM GMT 11 Nov 2009

George Buckley at Deutsche Bank

“The Bank of England’s Inflation Report today showed a sharper recovery in GDP
going forward - it now rises above 4pc in early 2011 easing back towards 3pc
by the end of 2012. Compare this to the August forecast where growth didn’t
get much above 3pc at any point over the three year horizon.

“The level of GDP returns to its Q108 peak a little quicker and inflation
rises to just above its 2pc target in three years’ time - about 0.4pc higher
than what was forecast in August. This is higher for both inflation and GDP
growth than we thought - but there are large risks either side.

“There is also a large rise in inflation expected in the near-term due to base
effects and the rise in VAT, but the Governor has said the MPC would look
through this volatility.”

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Factory gate prices rise in September

Prices at the factory gate rose for the first time in five months in
September, with almost all sectors taking part in the unexpected rise,
according to official figures today.

The Office for National Statistics said that non seasonally adjusted output
prices rose 0.5 per cent in September.

It took the annual rate of inflation to 0.4 per cent, the first positive
reading since April. Prices registered a 0.3 per cent fall in August.

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Boost for UK’s economic growth prospects

Britain’s economy shrank by 0.7 per cent in the second quarter, a smaller
decline than the 0.8 per cent initially estimated, official figures showed
this morning.

The annual drop in GDP was also revised up to show a 5.5 per cent fall. The
initial estimates had suggested a 5.6 per cent decline.

However, this is still the sharpest annual fall since records began in 1955.

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UK inflation: economists’ reaction to surprise stickiness in prices

Reuters

Published: 10:29AM BST 18 Aug 2009

ROSS WALKER, RBS FINANCIAL MARKETS
“It is obviously a huge shock. It does call into question further QE and
even the latest policy decision. There is a troubling stickiness here. We
are over a year into a pretty deep recession and we have core CPI rising and
CPI stuck fractionally below its target.”

MALCOLM BARR, UK ECONOMIST AT JP MORGAN
“Most of the upside surprise has come from the goods side. The services
side is behaving as you would expect in a recession. Since the VAT cut
last December we’ve had a run of surprisingly strong readings on the goods
side of the inflation basket. The drop in the exchange rate and other
factors mean UK inflation is proving stickier than people thought.”

JAMES KNIGHTLEY, ECONOMIST AT ING FINANCIAL MARKETS
“UK CPI for July continues to highlight how sticky inflation is in the
UK… Nonetheless, we expect inflation to slow further … We suspect that
inflation can fall to 1pc over the next few months which suggests that the
BoE could offer additional stimulus if the recovery proves to be more
sluggish than hoped.”

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UK manufacturing shrinks again

The UK’s manufacturing sector shrunk for the sixth month in a row in October but remained above September’s low, an industry survey indicates.

The CIPD/Markit manufacturing index stood at 41.5 in October, better than September’s 41.2 - the weakest reading since the survey began in 1992. Read more