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Economy in Brief

UK Unemployment Ticks Up in February, But Employment Also Shows Strong Rise
by Carol Stone April 13, 2005

Press reports on today's UK labor force data highlight the increase in unemployment measures. The ILO-defined concept, similar to that in the US, rose in the three months to February by 0.1% to 4.8%. The so-called "claimant count" increased 11,000 in March, with the associated rate rising to 2.7% from 2.6% in February. Wire service headlines and story leads pointed out that this was the largest monthly increase in claimants since May 2003, and noted that it was unfortunate coincidence that the news came on the very day the Prime Minister and the Labour Party begin their quest for reelection next month.

There are offsetting factors, though, that remove some of the sting from these unemployment figures. Firstly, both unemployment rates even at their new, slightly increased levels, remain the second lowest in nearly 30 years. Except for three recent months at 2.6%, the claimant count rate has not been as low as 2.7% since May 1975. The broader ILO unemployment rate was at or above 4.8% from September 1975 through last June; since then, the low was just 4.6% in August. So these latest figures hardly indicate a significant upturn, let alone a major uptrend in unemployment. (The ILO definition represents a three-month moving average centered on January.)

Moreover, employment rose once again and by a larger amount than in the previous several reports. The labor force measure, the number of people saying they have jobs, rose 72,000 to 28.64 million, still another a new high. This too is a 3-month centered moving average for January, compared to the December figure.

The average earnings index (AEI) for February (a 3-month moving average ending in February) was up 4.7% on a year ago, compared with 4.4% in the previous couple of reports. However, the acceleration was due to bonus payments, as the underlying base earnings measure eased to 4.3% from 4.4%.

United Kingdom
Seasonally adjusted data
Mar 2005 Feb 2005 Jan 2005 Dec 2004 2004 2003 2002
Unemployment Rate (%)   4.8* 4.7* 4.7 5.0 5.2
Claimant Count (thous) 829 818 814 824 854 933 947
Employment (mil)   28.64* 28.57* 28.44 28.18 27.91
  Change (thous)   +72K +46K +0.9% +0.9% +0.8%
Average Earnings Index Incl Bonuses: "Headline Rate"(%)** 4.7 4.4 4.4 4.4 3.4 3.5
Average Earnings Index Ex Bonuses: "Headline Rate" (%)** 4.3 4.4 4.4 4.2 3.6 4.0
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